American billionaires are fretting about the candidacy of Massachusetts’ Elizabeth Warren in the presidential election. It is mostly due to her proposed tax reforms that aim at taxing the super-rich. Ms. Warren, a Democratic front runner in the presidential election of 2020. It has proposed doubling the wealth tax on the super-rich by raising it to 6% from 3%. Under the plan, households with a net worth between $50 million and $1 billion must pay a wealth tax @2% every year. Once the net worth crosses $1 billion, the rate of tax will go up to 3%. However, last week Ms. Warner has suggested that the rate should be 6% up from 3%, and it created quite an outcry among the billionaire community who have been very vocal and come out in public to placate Ms. Warren’s idea.
Ms. Warren went ahead to explain the rationale behind her proposal and said that the money raised from the new tax would be used for funding her healthcare plan that will likely cost the federal government $20.5 trillion over 10 years.
The billionaires’ concern
Bill Gates, with a net worth of $102.6 billion and the second richest person in the world, according to Forbes magazine, has expressed his concern over Ms. Warren’s proposal about imposing a new tax on the super-rich during a talk at the New York Times Dealbook Conference on November 6th. He made it clear that he was all for super progressive tax systems, and already have paid over $10 billion in taxes was ready to pay much higher amount even if it went up to $20 billion. However, if he had to pay $100 billion as taxes, then he would take some time to calculate how much money will remain in his pocket. But Mr. Gates did not make it clear if he would support Ms. Warren over Donald Trump.
Mr. Gates’ reaction comes just after Jamie Dimon, CEO J.P. Morgan, who, when asked during an interview on CNBC last week whether Ms. Warren was anti-business, said his concern was for the harsh words used by Ms. Warren who keeps vilifying successful people. He emphasized the need to applaud successful people as he dislikes vilification of successful people and never does it.
Are billionaires averse to more taxes?
The angst of billionaires seems to be directed at anyone who proposes tax hikes that could make the billionaires even slightly poorer, as evident from the reaction of Leon Cooperman with a net worth of $3 billion. After spending 25 years at Goldman Sachs, Cooperman now has his own hedge fund company. In September, while speaking to CNBC, he told that that should Ms. Warren win the presidency, the stock market would fall by a massive 25%, and the same thing would happen if Bernie Sanders became the president because he too has proposed wealth tax.
Interestingly, Paul Tudor Jones, another billionaire hedge fund company owner, echoed the views of Cooperman about the prediction of the stock market crashing in the event of Ms. Warren winning the election.
The concern seems growing rapidly as Ms. Warren has progressed in the polls in the Democratic primary.