Senator Elizabeth Warren (D-MA), a 2020 US Presidential hopeful, speaks during the 'We The People' Summit at the Warner Theater April 1, 2019, in Washington, DC.
Brendan Smialowski | AFP | Getty Images
One Wall Street economists on Monday warned clients about the tax proposals touted by Democratic presidential hopefuls. Sens. Elizabeth Warren, D-Mass., And Bernie Sanders, I-Vt., Say investors' lots to worry about . "
Between Sanders' plan that's designed to 'tax and destroy' large net wealth" and Warren's overestimation of potential revenue streams to fund her policy goals, the policies of both should inspire unease "from various angles," wrote Philip Carlsson-Szlezak, chief US economist at AB Bernstein.
It's important for voters to differentiate between each candidate's proposals, the economist added, because while Sanders believes the U.S. should not have billionaires, Warren's plan views the fortunes of the ultra-wealthy as well as the remainder of their lives.
Sanders and Warren offer fundamentally different policy choices with diverging implications for tax burdens, wealth preservation and implicit wealth caps in America, "the economist wrote in a note.
" The political objective of the Sanders wealth tax is to abolish the billionaire class over the long run and significantly reduce it in the medium run, "Carlsson-Szlezak added. This finds expression in Warren's wealth tax schedule, which stunts wealth growth, but allows most estate sizes to persist or slowly rise. "
- Personal tax burden: Warren's nor Sanders' plan to increase households with a net worth less than $ 32 million.
- Wealth preservation: Voters are concerned about their ability to preserve (or grow) their wealth over time, especially under Sanders' plan, which is designed to grant a half-life of about 35 years to a fortune of $ 5 billion. Warren's "skim but retain" plan would allow for modest growth.
- Wealth cap: More worried under Sanders, whose plan implies a long-run wealth cap of $ 700 million; Warren's plan implies a wealth cap of $ 5.5 billion in the very long run.
- Fiscal deficit and program funding: reach the wealth distribution to make a significant impact.
The Bernstein economist did not push back on some of Wall Street's more apocalyptic concerns, writing that arguments about collapsing asset prices, "lower capital formation and the emasculation of American capitalism are" flimsy . "
" Removing 'unlimited upside' does sound un-American, but we're going to believe that today's occupants of college dorm rooms would not be dissuaded from taking entrepreneurial risk with a wealth tax, "he wrote.