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Her plan does not distinguish between individuals who are married or single when imposing a 2 percent tax on wealth over $50 million and 3 percent on wealth over $1 billion. Theoretically, that means a couple worth $100 million could divorce and split their wealth to avoid the tax.
"Changing your marriage status on paper to save a million dollars seems like a reasonable reaction to poorly designed tax policy," Heritage Foundation tax policy analyst Adam Michel told FOX Business.
As is, Warren's plan would "without a doubt result in mass divorce among those people that are at the threshold," said Michel, who is no fan of the wealth tax and describes it as "incredibly perverse."
Warren designed her plan with the help of two economists, Emmanuel Saez and Gabriel Zucman. Zucman told FOX Business there's a simple fix for the divorce incentive.
"There's a very simple way to avoid this problem which is to have lower brackets for singles. You can make the tax start at $50 million for married couples and $25 million for singles and there would be no incentive to divorce," Zucman said in an email.
Chris Edwards, director of tax policy studies at the Cato Institute, agreed that the divorce incentive could be erased, but he told FOX Business that there are other flaws in the wealth tax plan.
"The purpose of a rich couple divorcing would be to save money, but there are many other responses that rich people would do to save money. ... There would be all kinds of loopholes," Edwards said.
Warren says her wealth tax would raise trillions for government programs, but Edwards said industries would lobby for exemptions from the wealth tax and majorly cut the amount of money collected.
"No way the farm lobby would allow farmland to be taxed under wealth tax," Edwards said.
The richest Americans would simply look for places to park their wealth to avoid the tax. If that was farmland, they'd buy farmland and drive up the price of land, Edwards maintained.
"A dozen European countries used to have these taxes," Edwards said. "They've virtually all been repealed now. Why? Because of experience. Countries found that rich people avoid them, they're damaging to economies, they impose a burden on investment. ... They created a cat-and-mouse game between rich people and tax authorities."