The Debate Over Warren’s Tax on Investments and Medicare for All

Democratic presidential candidate Elizabeth Warren released her vision for funding the Medicare-for-All plan, and without surprise, it includes tough taxes on the wealthiest individuals and companies in the country. However, it added one surprise: a transaction fee for financial securities that could have a consequence on the middle class.

Warren is proposing a 10-basis point tax on the sale of bonds, stocks, and derivatives to raise approximately $800 billion over the next 10 years—part of her effort to foot the total $13.5 trillion-$34 trillion bill for providing insurance to every American. The American Retirement Association (ARA) was quick to point out that the tax would have a substantial impact on 401(k)s, IRAs, and pension plans of middle-class Americans.

If enacted, the ARA asserts that “American workers will have to work 2.5 years longer to make up for the lost retirement savings due to this new tax,” in a statement responding to the plan. The organization also claims that the tax would siphon off $64,200 over a 40-year lifetime savings in 401(k)s and IRAs.

Warren joins Sens. Kamala Harris and Bernie Sanders in pitching fees on financial securities transactions to fund their respective Medicare-for-All plans.

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Warren also proposed a systemic “annual [risk] fee that would be imposed on bank holding companies and nonbank financial companies…of 0.15% of firms’ covered liabilities defined primarily as total liabilities less deposits insured by the FDIC.”

That measure would be expected to generate approximately $100 billion between 2020-2029.

Warren also plans to repeal the Tax Cuts and Jobs Act of 2017, which would contribute $2.9 trillion in revenue in the next decade. She also wants to impose additional taxes on the highest 1% of income for individuals to raise a total of $3 trillion over the next decade. These, among other sources of revenue, are expected to provide a total of $20.5 trillion in federal funding for Medical for All between 2020 and 2029, “without imposing any new taxes on middle-class families,” Warren’s organization said in a statement.

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Tags: Democrats, Elizabeth Warren, Medicare, Tax

Canadian diversified pooled funds posted a median return of 1.5% before management fees during the third quarter, which was 0.3% below the benchmark portfolio, according to consulting firm Morneau Shepell. Since the beginning of the year, the funds have returned 12.8%.

“Although returns have been good since the year started, the decrease in interest rates has caused the solvency liability of many pension funds to increase at a faster pace than their assets,” Jean Bergeron, head of Morneau Shepell’s asset and risk management consulting team, said in a statement. “This means that on a solvency basis, pension fund financial positions have decreased by about 2% to 5% since the beginning of the year.”

The Morneau Shepell Performance Universe covers some 319 pooled funds managed by nearly 51 investment management firms. The pooled funds included in the universe have a market value of more than C$548 billion ($416.2 billion).

Despite higher volatility, the markets registered positive returns during the third quarter as the FTSE Canada Universe Bond Index returned 1.2%, the Canadian Equity S&P/TSX Composite Index returned 2.5%, and the MSCI World (developed markets) Index returned 1.9%. Emerging markets were the only assets with negative returns, with the MSCI Emerging Markets index losing 2.8%.

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During the quarter, short-term, mid-term and long-term bond indices saw returns of 0.3%, 0.9%, and 2.5% respectively, while the high-yield bond index posted a 2% return, and the real return bond index had a 1.3% return.

The median return for Canadian equity managers during the quarter was 2.4%, which was just under the 2.5% returns for the S&P/TSX Index. The S&P/TSX Small Cap Index decreased 1.2%, while the S&P/TSX Completion Index representing mid-cap stocks increased 1.7%, while the large-cap S&P/TSX 60 Index grew 2.7%.

Meanwhile, foreign equity managers’ median returns for US equities were

2.5%, compared with a 2.9% return for the S&P 500 Index; the median returns for international equities was 0.1% compared with 0.2% for the MSCI EAFE Index; and the returns for global equities was 0.9% compared with 1.9% for the MSCI World Index. And emerging markets equities fell 2.1% compared with a 2.8% decline for the MSCI Emerging Markets Index.

The results of Morneau Shepell’s study are based on the returns provided by portfolio managers, such as independent investment management firms, insurance companies, trust companies, and financial institutions. The returns are calculated before management fees are deducted.