Economist Larry Summers has advised Democratic presidents, but he’s not ready to jump behind Democratic Sen. Elizabeth Warren’s proposed wealth tax.
Warren, of Massachusetts, is a prominent voice in the party’s liberal wing and is exploring a run for president. Her proposal, which she is calling an ultra-millionaire tax, would apply to Americans with more than $50 million in assets.
However, Summers, who served as Treasury secretary under President Bill Clinton and as director of the National Economic Council for President Barack Obama, told CNBC on Wednesday he’d rather investigate other changes before moving “into whole new areas of taxation.”
“The places I would look first are to closing shelters, broadening the base, increasing compliance, equalizing upwards the rates on capital income, fixing the estate tax loophole. Those things I think have very large potential,” he said on “Squawk Alley.”
Warren is looking to raise about $2.75 trillion over 10 years with her plan, which would impose a 2 percent tax every year on households with assets over $50 million. That rate would raise to 3 percent on households with assets over $1 billion.
Summers said it’s too early to reach any definite conclusions yet and urged more research on the topic.
“We do need to study pretty carefully why it is that most of the European countries, who usually are more progressive than we are and had wealth taxes, have decided over the last 15 or 20 years to eliminate those wealth taxes and why almost none of them get anything like the kinds of revenue that Sen. Warren is aspiring to get,” he said.
Warren isn’t the only one in the Democratic Party targeting the rich. New York Rep. Alexandria Ocasio-Cortez recently floated a 70 percent marginal tax rate on income above $10 million.
The announcements have made the GOP — and the rich — jittery. Former Rep. Jeb Hensarling, a Republican who represented Texas from 2003 to 2019, said Tuesday on CNBC, “I am fearful of it because in America we do not traditionally vilify success. We celebrate success.”
It’s also resonating with more centrist politicians. Former Starbucks CEO and possible independent presidential candidate Howard Schultz cited Ocasio-Cortez’s ideas as one of the reasons he could never run as a Democrat.
However, polling has generally supported higher taxes on the wealthy, an issue that is becoming one of the most crucial of the nascent 2020 election campaign.
A recent Hill-HarrisX survey of 1,001 registered voters found that 59 percent supported Ocasio-Cortez’s proposal. And a Fox News poll published last week found that 70 percent of registered voters backed hiking taxes for families making more than $10 million a year.
— CNBC’s Matt Belvedere contributed to this report.