Former Treasury Secretary Larry Summers assailed proposals from presidential candidates Elizabeth Warren and Bernie Sanders to impose a wealth tax.
A tax on the wealth of the richest Americans would raise far less money than its proponents claim and would likely exacerbate any problems with the wealthy exercising too much influence over politics, Summers said Thursday at an event at the Peterson Institute for Interna
Summers was Treasury Secretary in Bill Clinton’s administration and a top economic adviser to Barack Obama. That makes his critique of the wealth tax proposals from Warren and Sanders particularly relevant for Democrats.
Summers said the data put forth by a pair of economists, Berkeley professors Emmanuel Saez and Gabriel Zucman, to support the case for a wealth tax is “substantially misleading” and “substantially inaccurate.”
He argued on Thursday that it was likely that the wealthy could avoid much of the tax by spreading their wealth around to relatives and by donating it to organizations that would pursue their goals. This could increase their political influence because some of those organizations would likely lobby for policies their donors approve of, Summers said.
“If you had a successful wealth tax that forced people to react the way they normally would by giving away their money to organizations that share their values and spent money in pursuit of their values, you would in all likelihood increase, rather than decrease, the influence of the views of the wealthy,” Summers argued.
Warren has proposed a 2 percent tax on wealth that exceeds $50 million, and 3 percent on the amount above $1 billion.
“The arguments around political power have almost no validity,” Summers said. “The truth is you can become one of the most powerful money people around the Democratic Party or the Republican Party for four or five million dollars a year. Nothing in this world is going to be able stop the wealthiest people in America from being able to come up with a vast multiple of that.”