With Democrats controlling the White House and Congress, Progressive Democrats want to tax the richest Americans to help revive the economy and address income inequality.
Sen. Elizabeth Warren (D-Mass.) and Reps. Pramila Jayapal (D-WA) and Brendan Boyle have introduced the Ultra-millionaire Tax Act. The bill would levy a 2% annual tax on the net worth of households and trusts between $50 million and $1 billion. It would also add a 1% surtax on assets above $1 billion.
The bill, which is co-sponsored by Sen. Bernie Sanders (I-VT), is similar to the one he pitched during the Democratic primary in 2019. Taxing the rich has long been a Democratic proposal to pay for health coverage, child care, mental health, drug addiction treatment, and other initiatives.
In addition to Sanders, the bill was also co-sponsored by lawmakers Sheldon Whitehouse (D-R.I.), Jeff Merkley (D-Ore.), Kirsten Gillibrand (D-N.Y.), Brian Schatz (D-Hawaii), Edward J. Markey (D-Mass.), and Mazie Hirono (D-Hawaii).
According to Warren, the bill would also include several measures to make sure those subject to the tax can’t escape it. The measures include a $100 billion investment in the Internal Revenue Service to rebuild and strengthen the agency. A 30% minimum audit rate for those who qualify for the tax and a 40% “exit tax” on the net worth above $50 million of any U.S. citizen who renounces their citizenship in order to escape the tax.
During the Democratic primary debates in 2018, Warren explained her bill and what it would go toward.
Two economists added that approximately 100,000 families would be subject to the tax, which would raise around $3 trillion over a decade.
“Wealth at the top has boomed during the COVID crisis. Billionaires’ wealth has literally exploded while many Americans struggle with job and income loss. The ultra-millionaire wealth tax is the most direct and powerful tool to curb growing wealth concentration in the US and make sure the ultra-wealthy pay their fair share in taxes. It will also bring substantial and much needed tax revenue to address the many challenges the country is facing,” Emmanuel Saez and Gabriel Zucman, economists from the University of California-Berkeley said in the release.
The bill is expected to meet stiff and unrelenting opposition from Republicans, who have long pushed tax breaks and trickle-down economics, despite numerous studies showing that method works only in theory.
Additionally, taxing the ultra-wealthy is often difficult because they have the resources to hide the true amount of their assets and there are questions on whether the constitution allows it.