Leon Cooperman Says Elizabeth Warren's Wealth Tax 'Probably Is Not Legal'

Sen. Elizabeth Warren is proposing a wealth tax that would add a new tax on everyone with a net worth of more than $50 million, but she might face one major hurdle: "it probably is not legal," billionaire investor Leon Cooperman said on CNBC's "Squawk Box."

What Happened: Supporters of a new wealth tax argue it will generate $3 trillion in incremental revenue for the U.S. government over 10 years. A 2% annual tax would be levied on someone's entire net worth if they are worth $50 million to $1 billion.

Billionaires would be subject to a 3% annual tax on their worth.

Aside from the fact that a wealth tax is likely illegal and has a 5% chance of passing into law, it is "foolish" and "has no merit," Cooperman said. If the U.S. government wants to raise new sources of revenue, there are more legitimate ways to do so, he said.

One example is the elimination of the carried interest loophole, but eliminating government waste is "the best way to go," in his view. 

Warren's idea of a wealth tax is not new, but she could have more support now with Democrats in control of Congress and the White House. 

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Why It's Important: Cooperman said he can accept a 50% tax rate, which implies he works "six months a year for the government and six months for me." He said he supports a progressive income tax structure in which "rich people should pay more."

"We should not look to make radical changes, we can make changes around the edge," he said. "We can do a better job — no question about it."

What's Next: In the event that a wealth tax passes, investors will likely rush toward gold, as it will be seen as one of the ways for rich people to hide their wealth, Cooperman said.