Billionaire Leon Cooperman confirms the wealth-tax implementation problem: rich people will hide assets

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Leon Cooperman has decried the public and politicians ‘attacking the wealthy.’ CNBC/Getty
  • Billionaire Leon Cooperman told CNBC that he thinks Sen. Elizabeth Warren’s wealth has “no merit.”
  • He questioned the legality of the measure and echoed concerns over potential implementation.
  • “Go out and buy yourself some gold because people are going to rush to find ways of hiding their wealth,” he said. 
  • Visit the Business section of Insider for more stories.

Billionaire Leon Cooperman told CNBC’s Squawk Box that Sen. Elizabeth Warren’s proposed wealth tax has “no merit” and is “foolish.” He also revealed the real attitude among the wealthy and why critics say such a tax has implementation problems: the 1% would hide their assets.

Sen. Warren and several progressives introduced the Ultra-Millionaire Tax Act on Monday, which would enact a 2% annual tax on households with net worths between $US50 ($64) million and $US1 ($1) billion, and a 3% tax on households with a net worth over $US1 ($1) billion.

“If the wealth tax passes, go out and buy yourself some gold because people are going to rush to find ways of hiding their wealth,” Cooperman said on CNBC.

That’s exactly the concern over the implementation of a wealth tax: Some experts say it would be difficult to audit the wealthy’s assets, and they could explore ways to devalue or appraise their assets in such a way to lower their tax bill.

Even Treasury Secretary Janet Yellen seems to agree, telling The New York Times that she wasn’t planning a wealth tax similar to Warren’s because it is “something that has very difficult implementation problems.”

Cooperman’s position is clear: “Most countries have tried a wealth tax and repealed it, because it doesn’t work.” But he went further, saying, “I don’t think it’s intelligent. I don’t think it’s legal.”

When asked for further comment on the wealthy concealing their wealth and whether his alternate proposals would be more effective than a wealth tax, Cooperman wrote in an email to Insider: “The observation is obvious. Nothing to add.”

One argument: There are other ways to raise revenue

Cooperman mentioned several alternative ways to raise revenue, including eliminating carried interest and trying to eliminate waste. Eliminating waste is the best way to go, he added.

It’s not the first time that Cooperman has criticized Warren’s wealth tax efforts: In 2019, he even wrote her a five-page letter responding to one of her tweets. CNBC obtained a copy of the letter at the time, which reportedly said “your vilification of the rich is misguided, ignoring, among other things, the sources of their wealth and the substantial contributions to society which they already, unprompted by you, make.”

In his most recent CNBC interview, he doubled down on his concerns over the vilification of the wealthy: “We all have to work together to deal with our problems, and it’s as simple as that.”

Warren’s wealth tax could potentially raise billions from American billionaires, and is seen as one route to address inequality, which has been exacerbated by the pandemic. 

“The ultra-rich and powerful have rigged the rules in their favor so much that the top 0.1% pay a lower effective tax rate than the bottom 99%, and billionaire wealth is 40% higher than before the COVID crisis began,” Warren said in a press release for the bill. “A wealth tax is popular among voters on both sides for good reason: because they understand the system is rigged to benefit the wealthy and large corporations.”