Warren’s Wealth Tax Probably Doomed, Nobel Winner Shiller Says

(Bloomberg) -- Taxing the ultra-rich more heavily as proposed by U.S. presidential hopeful Elizabeth Warren probably won’t work, according to Nobel laureate Robert Shiller.

The widening gap between the rich and the poor and its effect in populist politics has been a key theme at this years’s World Economic Forum in Davos, Switzerland, with companies urged to take more responsibility in social matters.

“There is a problem with the wealth tax,” Shiller, economics professor at Yale University, told Bloomberg Television’s Francine Lacqua and Tom Keene on the sidelines of the Forum on Friday. “People leave, they take their business elsewhere.”

Instead, he favors a plan that would kick in the future, perhaps in 10 years, should inequality “become catastrophic.”

This week, Massachusetts Senator Elizabeth Warren proposed a wealth tax on Americans worth more than $50 million. House Democrat Alexandria Ocasio-Cortez has also called for a sharp tax hike on the highest incomes to help fund a plan to phase out fossil fuels.

“I think Elizabeth Warren has just harmed her potential,” Shiller said.

To contact the reporter on this story: Catherine Bosley in Zurich at cbosley1@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Kevin Costelloe, Ross Larsen

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