Top Democrats are preparing a new tax plan that would levy a tax on billionaires as a part of their tax reform plan in the reconciliation bill.
Senate Finance Committee Chair Sen. Ron Wyden (D-Oregon) is working on a proposal that would levy a tax on investment incomes of billionaires, as well as a 15 percent minimum corporate tax to ensure that companies pay federal income taxes. The billionaire tax is a far smaller proposal than previous wealth tax proposals and would only affect the roughly 745 billionaires in the U.S. Democrats hope that it could be a crucial revenue source for the Build Back Better Act.
Importantly, the small tax proposal has the tentative support of Senators Joe Manchin (D-West Virginia) and Kyrsten Sinema (D-Arizona). Because of the two conservative Democrats — Sinema in particular — the party has been struggling to find ways to cover the cost of the reconciliation bill and appease Sinema and Manchin, who have fought hard to maintain the dismally low tax levels for corporations and the wealthy set by Republicans in 2017.
Democratic leaders are confident that the billionaire tax proposal will make it into the final bill. “We probably will have a wealth tax,” House Speaker Nancy Pelosi (D-California) said on CNN over the weekend. The Finance Committee is expected to release a more detailed version of the proposal, which is expected to raise $500 billion for the bill, on Wednesday.
Targeting billionaires may be a popular move among the caucus if only because of how narrow the tax would be. Indeed, the tax wouldn’t even be levied on the wealthiest 1 percent of Americans, but only the richest — roughly 0.0002 percent of Americans. And it wouldn’t levy a tax on their wealth overall, as progressive lawmakers have previously proposed, but only on investment incomes. It is a small enough tax that Treasury Secretary Janet Yellen said that she wouldn’t regard it as a wealth tax.
However, economists still say that the tax would be a step in the right direction, setting precedent for other future similar taxes. Economist Gabriel Zucman, who worked with Sen. Elizabeth Warren (D-Massachusetts) to craft her wealth tax proposal, told newsletter The.Ink that the tax would only apply to increases in the wealth — or what economists refer to as unrealized capital gains — rather than the entirety of the wealth.
“Billionaires own $5 trillion in wealth today, of which about 60 percent (roughly $3 trillion) corresponds to unrealized gains,” Zucman explained. “So you can think of this tax as a big one-time wealth tax on 60 percent of the wealth of billionaires, plus an ongoing annual tax on their future gains.”
Still, this will likely be insufficient to meet the demands of progressive advocates and lawmakers like Sen. Bernie Sanders (I-Vermont), who argues that billionaires shouldn’t exist while millions of Americans are struggling to pay bills and survive. A larger wealth tax could cover the entirety of the original reconciliation bill and more, rather than just a fraction of the paltry $1.9 trillion proposal before Congress now.
Warren has previously introduced a tax on the ultra-wealthy that would create a 2 percent tax on wealth over $50 million, and a 3 percent tax on wealth over $1 billion. The tax would affect the top 0.05 percent of U.S. households. Zucman and Emmanuel Saez, another economist who helped work on the bill, say it could raise over $3 trillion over the next decade — enough to cover nearly the entire $3.5 trillion price tag for the original reconciliation bill. Warren has advocated for the inclusion of the tax in the reconciliation bill, saying “we need to pass a bill that ensures that billionaires and corporations are finally paying their fair share.”
Senate Minority Leader Mitch McConnell (R-Kentucky) has come out against the proposal even before it’s been released, saying that it would penalize people who have supposedly “invested wisely” while rewarding people who have “invested poorly.”
This is a perverse way of viewing wealth, especially since billionaires do not earn their wealth in the same way as the working class does, leading leftist advocates to liken their wealth to theft from the government and workers. Investing is already a highly prohibitive activity, available largely only to the wealthy; recent data has shown that a record 89 percent of individually-owned stocks are owned by the wealthiest 10 percent of Americans.
Billionaires have grown their wealth massively during the pandemic, while the working class suffered under poor conditions and meager pay. As of earlier this month, U.S. billionaires have expanded their collective wealth by $2.1 trillion just over the past 19 months, a 70 percent increase. Meanwhile, Federal Reserve data shows that the top 1 percent of Americans have now hoarded 27 percent of the nation’s finances, more wealth than the amount owned by the entire middle class.
We’re not backing down in the face of Trump’s threats.
As Donald Trump is inaugurated a second time, independent media organizations are faced with urgent mandates: Tell the truth more loudly than ever before. Do that work even as our standard modes of distribution (such as social media platforms) are being manipulated and curtailed by forces of fascist repression and ruthless capitalism. Do that work even as journalism and journalists face targeted attacks, including from the government itself. And do that work in community, never forgetting that we’re not shouting into a faceless void – we’re reaching out to real people amid a life-threatening political climate.
Our task is formidable, and it requires us to ground ourselves in our principles, remind ourselves of our utility, dig in and commit.
As a dizzying number of corporate news organizations – either through need or greed – rush to implement new ways to further monetize their content, and others acquiesce to Trump’s wishes, now is a time for movement media-makers to double down on community-first models.
At Truthout, we are reaffirming our commitments on this front: We won’t run ads or have a paywall because we believe that everyone should have access to information, and that access should exist without barriers and free of distractions from craven corporate interests. We recognize the implications for democracy when information-seekers click a link only to find the article trapped behind a paywall or buried on a page with dozens of invasive ads. The laws of capitalism dictate an unending increase in monetization, and much of the media simply follows those laws. Truthout and many of our peers are dedicating ourselves to following other paths – a commitment which feels vital in a moment when corporations are evermore overtly embedded in government.
Over 80 percent of Truthout‘s funding comes from small individual donations from our community of readers, and the remaining 20 percent comes from a handful of social justice-oriented foundations. Over a third of our total budget is supported by recurring monthly donors, many of whom give because they want to help us keep Truthout barrier-free for everyone.
You can help by giving today during our fundraiser. We have 10 days to add 500 new monthly donors. Whether you can make a small monthly donation or a larger gift, Truthout only works with your support.