We’re hearing a lot about “wealth taxes” from the 2020 Democratic presidential candidates. But a wealth tax is still a bit of a mystery to most Americans, since the idea is new in the U.S. Some people are also concerned about the impact on the economy if such a tax is ultimately imposed. So let’s take a look at the wealth tax proposals from two of the leading White House contenders…And the chances of a wealth tax becoming law if the Democratic nominee is elected president in November. First up: Mass. Senator Elizabeth Warren’s plan. Her “ultramillionaire tax” would give Uncle Sam 2% of a household’s total net worth above $50 million…6% on net worth above $1 billion. Total net worth would consist of all worldwide assets, including residences, businesses, trusts, retirement funds and personal property worth $50,000 or more. Assets held by minors would count, too. People with liquidity issues could defer payment of the tax for up to five years. IRS audits of wealthy individuals would rise. She also wants to levy a 40% “exit tax” on the net worth above $50 million of Americans who renounce their U.S. citizenship. Vt. Senator Bernie Sanders plan is more ambitious. He is calling for a 1% tax on married couple’s net worth above $32 million. The rate would gradually increase to 8% on wealth over $10 billion. Tax bracket ranges would be cut in half for singles. There would also be a 40% exit tax on the net value of all assets under $1 billion…60% over $1 billion…for wealthy expats trying to avoid the tax. IRS would be required to audit 30% of wealth tax returns for anyone in the 1% bracket and 100% of returns from billionaires. A national wealth registry would also be formed to help enforcement, Will we have a wealth tax if a Democrat is elected president? Probably no. There would be political hurdles. Even if the Democrats gained the majority in both houses of Congress, it would still be extremely hard to get enough law makers to vote for a wealth tax. As the recent debates have shown, many Democrats are not on board with the idea. Plus, if the Republicans hold on to the majority in the Senate, any wealth tax passed by the House would be dead on arrival in the upper chamber. The courts might also strike down a wealth tax law. Legal scholars are split on whether such a tax is constitutional. The U.S. Constitution requires a “direct tax” to be apportioned among the states according to their population. So, for example, since California has twice as many people as N.Y., California residents would have to pay twice as much as N.Y. residents. If a wealth tax is enacted and isn’t apportioned properly, the courts would have to decide whether it is a direct tax. If so, it’s unconstitutional. Democrats would still have other options for raising taxes on the wealthy…If a wealth tax is not in the cards. Among the more viable plans offered up by White House candidates: Raising the top income tax rate back to 39.6%…or higher. Doing away with the step-up in basis for inherited property. Ending favorable tax rates for long-term capital gains. And lowering the estate tax exemption to $3.5 million or so.

We’re hearing a lot about “wealth taxes” from the 2020 Democratic presidential candidates. But a wealth tax is still a bit of a mystery to most Americans, since the idea is new in the U.S. Some people are also concerned about the impact on the economy if such a tax is ultimately imposed. So let’s take a look at the wealth tax proposals from two of the leading White House contenders…And the chances of a wealth tax becoming law if the Democratic nominee is elected president in November. First up: Mass. Senator Elizabeth Warren’s plan. Her “ultramillionaire tax” would give Uncle Sam 2% of a household’s total net worth above $50 million…6% on net worth above $1 billion. Total net worth would consist of all worldwide assets, including residences, businesses, trusts, retirement funds and personal property worth $50,000 or more. Assets held by minors would count, too. People with liquidity issues could defer payment of the tax for up to five years. IRS audits of wealthy individuals would rise. She also wants to levy a 40% “exit tax” on the net worth above $50 million of Americans who renounce their U.S. citizenship. Vt. Senator Bernie Sanders plan is more ambitious. He is calling for a 1% tax on married couple’s net worth above $32 million. The rate would gradually increase to 8% on wealth over $10 billion. Tax bracket ranges would be cut in half for singles. There would also be a 40% exit tax on the net value of all assets under $1 billion…60% over $1 billion…for wealthy expats trying to avoid the tax. IRS would be required to audit 30% of wealth tax returns for anyone in the 1% bracket and 100% of returns from billionaires. A national wealth registry would also be formed to help enforcement, Will we have a wealth tax if a Democrat is elected president? Probably no. There would be political hurdles. Even if the Democrats gained the majority in both houses of Congress, it would still be extremely hard to get enough law makers to vote for a wealth tax. As the recent debates have shown, many Democrats are not on board with the idea. Plus, if the Republicans hold on to the majority in the Senate, any wealth tax passed by the House would be dead on arrival in the upper chamber. The courts might also strike down a wealth tax law. Legal scholars are split on whether such a tax is constitutional. The U.S. Constitution requires a “direct tax” to be apportioned among the states according to their population. So, for example, since California has twice as many people as N.Y., California residents would have to pay twice as much as N.Y. residents. If a wealth tax is enacted and isn’t apportioned properly, the courts would have to decide whether it is a direct tax. If so, it’s unconstitutional. Democrats would still have other options for raising taxes on the wealthy…If a wealth tax is not in the cards. Among the more viable plans offered up by White House candidates: Raising the top income tax rate back to 39.6%…or higher. Doing away with the step-up in basis for inherited property. Ending favorable tax rates for long-term capital gains. And lowering the estate tax exemption to $3.5 million or so.

I’ve often heard comparisons to health care costs and social benefits in Scandinavian countries such as Norway versus the United States. Well, there is an old saying. You get what you pay for (but often there is a catch). The Wealth Tax in Norway is .85% of the value of all worldwide property owned over about US$ 170,000. ALL property includes the value of retirement accounts-everything. So if you have a 401(k) plan that is worth $1 Million, plus a house with equity of $250.000 and maybe $50,000 in savings, each year Norway takes $11,000 in wealth tax on top of taxing your annual income at 40%. Presently there is no Wealth Tax in the U.S., our income tax rates are substantially lower that Scandinavian countries , and the wait time to see a doctor or undergo a medical procedure is substantially less in the U.S. Presently that wait time to see a GP in Norway is about a week, a specialist can be several weeks and a medical (including) surgical procedure can take months, depending on the procedure. Also, the population of Norway is equal to that of Alabama and Scandinavia is about that of Georgia.

I have a client, an American, who has lived and worked in Norway for a long time and paid the very high taxes. However when he needed surgery, he chose doctors and hospitals located in the United States and paid them out of pocket.

Now a major problem that I now see in America is the fact that if we check the numbers of high earners versus the uneducated and under employed here in the U.S., I can see that we could be starting to slant to a point where the income tax paid by Americans cannot be apportioned among the states based on population.