Sen. Elizabeth Warren is renewing her push for a wealth tax, citing a recent Supreme Court case that could have significant implications for her plan. The Massachusetts Democrat argues that the wealthiest individuals in the country are paying only a small fraction of their wealth in taxes, while middle-class families shoulder a much heavier burden. In an interview with CNBC, Warren describes this disparity as fundamentally unfair in a democracy.
This week, the Supreme Court heard arguments on a case related to the 2017 Trump tax law, which imposed a one-time tax on the foreign earnings of American companies. The outcome of this case could potentially impact the constitutionality of Warren’s proposed wealth tax.
To illustrate the need for her wealth tax proposal, Warren points to Elon Musk’s acquisition of Twitter in 2022. Musk financed a portion of the purchase using margin loans on his stock holdings, allowing him to avoid paying income taxes by not selling the stock and thereby avoiding capital gains income.
Warren highlights the problem with this approach, saying that it allows billionaires to enjoy luxuries like yachts and extravagant homes while Boston public school teachers bear the brunt of tax obligations. She argues that a more equitable solution would be to change the tax code so that the proceeds from securities-based loans are taxed as income.
Warren acknowledges that taking a more “minimalist approach” by taxing securities-based loans as income is a step in the right direction.