Warren Tax Plan Could Give Foreign Investors An Advantage Undercutting Economic Patriotism Agenda

Warren Tax Plan Could Give Foreign Investors An Advantage Undercutting Economic Patriotism Agenda
Photo Credit: Joseph Stalin and a Girl by Andrew Milligan sumo is licensed under Flickr CC BY 2.0
The raft of investment taxes Democratic presidential candidate Elizabeth Warren plans to levy to pay for her social programs would advantage foreign investors, a side effect that would run counter to her goal, shared with President Trump, of lowering the trade deficit.

To pay for "Medicare For All" and other major new government benefits, Warren would radically increase taxes on investments made by rich taxpayers, including through a major new wealth tax.

By taxing American investors, Warren would give a boost to foreign investors looking to buy U.S. assets:  stocks, real estate, and so on.  The spike in foreign investment would also entail an increase in the trade deficit.

"Foreign ownership of American companies accrues benefits to foreigners," said Ric Edelman, a top wealth adviser for rich individuals. "This weakens the strength of Americans in terms of global dominance and interferes with the ability of ordinary Americans to save and invest for the future".

While economists generally don't see trade deficits as a problem, some analysts argue trade deficits can cost the country good jobs, because they mean more manufactured goods are sourced abroad rather than domestically, eliminating manufacturing jobs in places like the Rust Belt.

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