Wealth-tax proposals from Democratic presidential candidates Sen. Elizabeth WarrenElizabeth WarrenProgressives praise Biden's picks for economic transition team Overnight Defense: Afghan war critic who said Europe too welcoming to 'Muslim invaders' installed at Pentagon | Trump, Biden mark Veterans Day with wreath layings | Senate Dems warn against nixing plan to change Confederate base names GOP senator: Biden Cabinet picks will be a 'discussion' with Republican Senate MORE (D-Mass.) and Sen. Bernie SandersBernie SandersOn The Money: Biden wins America's economic engines | Progressives praise Biden's picks for economic transition team | Restaurants go seasonal with winter shutdowns during pandemic Progressives praise Biden's picks for economic transition team Bernie Sanders confirms interest in becoming Biden's Labor secretary MORE (I-Vt.) would significantly increase the trade deficit in the next 10 years, according to a paper released Monday by the right-leaning Tax Foundation.

The Tax Foundation estimated that the average trade deficit from 2020 to 2029 as a percentage of gross domestic product (GDP) would more than double under both of the candidates' proposals. The trade deficit would increase from 3.1 percent of GDP, as projected by the Congressional Budget Office, to 6.94 percent under Warren's proposal and 7.53 percent under Sanders's proposal, according to the paper.

The Tax Foundation says that the increase in the trade deficit would occur as a transitional effect of a wealth tax. The group's report said that the potential trade deficit impact of a wealth tax could be comparable to the substantial increase in the U.S. trade deficit that occurred from 1999 to 2008 as China grew as a trading partner.

"A wealth tax would induce foreign inflows of hundreds of billions of dollars a year to replace reductions in U.S. savings," the report said. "Those inflows would drive up the value of the dollar and keep it elevated even as U.S. net exports collapsed."

Garrett Watson, a senior policy analyst at Tax Foundation, said that in the long run, the Tax Foundation would expect the trade deficit to decline slightly as dividends accrue to foreign investors, but that the trade deficit wouldn't fully return to its level prior to the enactment of a wealth tax.

The Tax Foundation argued that trade deficit increases aren't necessarily a bad thing, but that a rapid change in the trade deficit could be a concern.

The think tank estimates that Warren's wealth tax would reduce long-run GDP by 0.37 percent and that Sanders's proposal would reduce long-run GDP by 0.43 percent.

Because the Tax Foundation thinks that a decline in U.S. savings due to a wealth tax would be replaced by an increase in foreign investment in U.S. corporations, the think tank is not predicting a large decline in GDP under the wealth-tax proposals. However, if the U.S. imposed tariffs on foreign goods, a wealth tax would have less of an impact on the trade deficit but more of an impact on the economy, said Watson.

The Tax Foundation's report is one of a number of analyses released in recent weeks, particularly from conservative groups, about Warren and Sanders's wealth-tax proposals. The Tax Foundation's report was released one week before the Iowa caucuses.

Warren is proposing a 2 percent wealth tax on net worth between $50 million and $1 billion and a 6 percent tax on net worth above $1 billion. Sanders is proposing a wealth tax with eight brackets, with the highest bracket being a rate of 8 percent on net worth above $10 billion. Both candidates plan to use the revenues raised by their taxes to help finance their spending proposals in health care and other areas.

The Tax Foundation estimated that Warren's proposal would raise $2.6 trillion over 10 years before accounting for macroeconomic effects and $2.2 trillion after accounting for economic effects. It estimated that Sanders's proposal would raise $3.2 trillion on a conventional basis and $2.6 trillion after factoring in economic effects. These estimates are less than the Warren and Sanders campaigns project their wealth taxes would raise.

Warren campaign spokeswoman Saloni Sharma said that "leading independent experts have concluded that Elizabeth's plans are fully paid for."

"The wealth tax will produce trillions in revenue to fund middle-class investments that will grow our economy and provide families with more financial security," she added.

Progressives have criticized wealth-tax analyses that argue that the taxes would hurt the economy, since the taxes would finance spending proposals that would help the middle class. Progressives have also criticized the Tax Foundation's methodology in the past.