Elizabeth Warren's wealth tax could include a $1 million marriage penalty

Harvard economist N. Gregory Mankiw said ultra-wealthy couples could split their fortunes in half through divorce and avoid paying a wealth tax proposed by presidential candidate Elizabeth Warren.

proposed wealth tax may create a new incentive for rich couples to divorce to avoid the tax.

"The Warren proposal entails a $1 million per year marriage penalty," said Mankiw, who was the head of President George W. Bush's Council of Economic Advisers. A similar strategy could save even more for billionaires. If a couple is worth $2 billion and split their fortune in half through divorce, they could save $10 million a year.

"I don't know of any cases where the IRS has stepped into a legal divorce and challenged it," said Joseph Perry, tax and services leader for Marcum.

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