Many economists question whether wealth tax proposals by Senators Sanders and Warren would result in the additional taxes both have suggested. Fourteen European countries have had wealth taxes, but it survives in only four. Of those only one, Spain, has rates that exceed 0.90 percent. (Note: Madrid residents are exempt from the wealth tax.) Evidence demonstrates the wealthy are more likely to find ways of avoiding the tax in regions that have higher rates. Under Warren’s plan, rates range from 2.0 percent to 6.0 percent while Sanders’ plan would assess the wealthy at rates from 1 percent to 8 percent. This points to the difficulties in administering a wealth tax. Certainly, some assets such a marketable securities, are easy to value. However, challenges arise when it comes to placing value on family owned businesses, farm assets, artwork, jewelry, antiques, to name a few. How is often volatile real estate valued? There is also a question as to the ability of the IRS to track down assets held in foreign countries. Many have reciprocal reporting agreements with the U.S. while others do not. Over the past year we Iowans have privileged to hear all the major Democratic candidates. We Democrats support raising taxes on the wealthy. However, former Vice President Biden proposes utilizing current mechanisms (such as the income tax, gift tax, and inheritance tax) for doing so rather than introducing one that would produce questionable results.
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