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Sen. Tim Scott calls wealth tax "a terrible idea," urges focus on incentives and spending
Summary
Speaking at a U.S. Senate Banking Committee session, Sen. Tim Scott said a federal wealth tax would be "punitive," citing a 2015 unrealized‑gain proposal and concerns about how asset‑rich farmers would pay; he argued that lower capital‑gains rates have historically coincided with higher revenue and urged attention to federal spending.
Sen. Tim Scott told participants at a U.S. Senate Banking Committee session that a federal wealth tax would be unworkable and counterproductive.
"A wealth tax is just a terrible idea," Scott said, citing a 2015 proposal by "Secretary Geithner" to tax unrealized gains and recounting the hypothetical that farmers who own "thousands and thousands of acres in South Carolina" would face a difficult payment burden. He repeated the example as a caution about practical enforcement and liquidity problems: "We'll give you 15 years to pay that tax," he said the prior proposal suggested.
Scott framed the matter as one of incentives and receipts rather than solely of redistributing wealth. He said the bottom 50% of earners "pay essentially zero in taxes" and argued that changes in rates do not automatically raise revenue because taxpayers can time the realization of gains. "When you lower the capital gains tax, the revenues went up. When you increase the capital gains tax, the revenue went down," he said, citing historical experience in the Clinton and Bush years.
A committee participant raised the labor‑versus‑capital question and whether the longstanding lower capital‑gains rate still serves to incentivize investment among the very wealthy. The participant suggested that taxing gains above very high thresholds at higher rates could be considered.
Scott said tax cuts can stimulate activity and that realized capital gains are often reinvested, creating jobs. He warned that high state tax burdens have prompted an "exodus" from places such as California and New York and urged caution about policies that could prompt similar migration at the federal level.
On federal fiscal policy, Scott described a wealth tax as "punitive" to the most successful Americans and argued the broader issue is federal spending and budget discipline. He praised Sen. Susan Collins for leading bipartisan work on appropriations, saying, "thank God for Susan Collins" after describing a package of bills that passed through the appropriations process; he also noted that the Banking Committee had advanced a housing bill by wide margins as an example of bipartisan cooperation.
Scott reiterated distributional figures in arguing for attention to the poorest Americans, saying the standard deduction and credits can leave the lowest‑income households with a near‑zero federal tax burden while the top 2% pay "about 38 to 40%" of overall taxation and the top 10% closer to 60%. He said he is "okay with" shielding the poorest households from federal income tax burdens and emphasized concern for single‑parent households in poverty.
The session ended with participants thanking each other and noting more discussion to come.
