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Two of the most powerful economic voices in America disagree on a tax for the uber-rich

   March 2, 2021 1:42 AM
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by Matt Egan, CNN Business

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New York (CNN Business)Democratic Senator Elizabeth Warren faces an uphill battle persuading Washington to back her tax on ultra-millionaires — starting with convincing her own party's Treasury Secretary.

Janet Yellen, whom Warren praised last year as an "outstanding choice" to lead the Treasury Department, fears a wealth tax would be too messy to implement. "Then Janet and I need to have a conversation about implementation," Warren told CNN Business on Monday after introducing her Ultra-Millionaire Tax Act. The bill would seek to raise $3 trillion to rebuild the economy and fight inequality by imposing a 2% annual tax on the net worth of households and trusts between $50 million and $1 billion. Billionaires would face a 3% tax. "We designed this wealth tax by building on the experiences of other countries that put together a wealth tax and weren't always successful," Warren said in the interview. "We saw where the mistakes were and made sure we tightened it up." $100 billion for the IRS to fight tax cheats Critics argue that taxing wealth would be challenging, if not unconstitutional. In particular, there are concerns about how to value assets and prevent the wealthy from hiding cash overseas Yellen, the former Federal Reserve chief, said last week at a DealBook conference that she isn't planning a wealth tax like Warren's because it's "something that has very difficult implementation problems." "People say, 'Well, rich people cheat so we shouldn't even try to use a wealth tax,'" Warren said. "But if rich people cheat, that doesn't mean we should just give up and let them pay taxes at lower rates than everyone else. That means we need to hire more enforcement and make them follow the rules." Warren's wealth tax comes with teeth. The legislation has a built-in audit rate of 30%, meaning every year nearly a third of all families would be audited. And the bill calls for boosting the budget of the IRS by $100 billion to build up the agency's audit firepower and modernize IT systems. The Warren plan also proposes a 40% "exit rate" on the net worth above $50 million of any US citizen who renounces their citizen to avoid paying the tax. "Once you've got the wealth tax in place, it's not very hard to monitor year by year. If last year you owned real estate, this year you either better own that same real estate or have a lot of cash that you took in a sale," Warren said.

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