Use wealth tax to wipe out college debt and pay tuition

U.S. Senator Elizabeth Warren speaks at Manchester Community College in Manchester, NH on Jan. 12, 2019.

John Tlumacki | Boston Globe | Getty Images

U.S. Senator Elizabeth Warren speaks at Manchester Community College in Manchester, NH on Jan. 12, 2019.

Democratic presidential candidate Elizabeth Warren has identified something else to finance with her proposed wealth tax: wiping out student debt and tuition at public colleges.

The Massachusetts senator, who has raced ahead of her 2020 rivals with detailed plans to re-arrange America’s economic priorities, on Monday unveiled her proposal for easing access to higher education. It would:

  • Spend $1.25 trillion over 10 years to eliminate up to $50,000 in student debt for those with household incomes under $100,000
  • Allow states to make public colleges tuition-free
  • Spend $100 billion on expanded Pell grants to defray more non-tuition expenses

The money would come from the 2% annual tax she proposes to levy on accumulations of wealth exceeding $50 million, with an additional 1% on wealth exceeding $1 billion. Warren justified the link by asserting that higher education financing has long been crimped by tax cuts for wealthy Americans and corporations.

“It’s time to end that experiment, to clean up the mess it’s caused and to do better,” Warren wrote in a Medium post. “We can make big structural change and create new opportunities for all Americans.”

Warren’s plan would scale back relief for people with incomes above $100,000 and it would end entirely at the $250,000 level. She said her proposal would benefit 95% of the 45 million Americans carrying student debt, and wipe it out for 75% of them. Those steps, she argued, that would stimulate the economy by improving credit scores, increasing home-buying, and easing small-business formation.

At the same, it would cut off federal money from for-profit colleges, which she says “enrich themselves while targeting lower-income students, service members and students of color and leaving them saddled with debt.”

Warren’s wealth tax would raise an estimated $2.7 trillion over 10 years. She has previously proposed using roughly $700 billion of that money to provide universal childcare and early childhood education. In theory, that would leave nearly $1 trillion more for Warren to spend.

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