Presidential contender Sen. Elizabeth Warren's tax plan may eliminate any incentive to invest, wealth tax pioneer Edward Wolff told CNBC on Friday.

Warren's wealth tax is "going to induce a big capital flight out of this country," said Wolff, an economist and author of "Top Heavy," a book on income inequality. "Who is going to sit around and see their wealth earning nothing or even in negative territory."

Warren, a front-runner in the 2020 presidential race, is proposing a 2% tax on household net worth above $50 million and a 6% tax on net worth over $1 billion. That, along with changing how investment gains are taxed for the top 1% of households, would generate more than $3 trillion over 10 years, according to analysis from The New York Times.

Some wealthy individuals, including billionaire investor Leon Cooperman, have been vocal critics of Warren's proposed wealth tax and what they call her general distrust of America's richest individuals.

"The vilification of billionaires makes no sense to me," Cooperman told CNBC.

Wolff said Warren's plan would only impact a small portion of the U.S. population. But he also said the plan would impact the after-tax rate of return.

Wolff, who in the 1990s called for the introduction of an annual tax on wealth, said that presidential candidates should instead propose a 0.05% tax rate on wealth over $200,000 and 0.03% tax on wealth of $2.5 million or more. Those rates are low enough to not cause wealthy folks to flee, Wolff said.

"These people are going to move their money to other countries" if Warren's plan is implemented as written, he said on CNBC's "Power Lunch."