On Monday, Sen. Elizabeth Warren (D-Massachusetts) unveiled legislation proposing a wealth tax that she championed during her presidential campaign.
The bill, called the Ultra-Millionaire Tax Act of 2021, calls for a 2 percent tax on wealth in excess of $50 million and a 3 percent tax on wealth over $1 billion. This would apply to the top 0.05 percent of U.S. households, the bill’s fact sheet says, or about 100,000 households.
Warren released the bill with Representatives Pramila Jayapal (D-Washington) and Brendan Boyle (D-Pennsylvania), and the idea has been co-sponsored by labor unions and a number of other progressives like Sen. Bernie Sanders (I-Vermont).
The lawmakers argue that the bill is especially salient as the nation grapples with a pandemic that has only increased the wealth of the already ultrarich. Since the start of the pandemic, U.S. billionaires’ wealth has skyrocketed nearly 40 percent, finds one Forbes analysis.
Warren and fellow lawmakers argue that because the U.S. doesn’t have a wealth tax, the ultrarich pay proportionally less on their wealth in taxes than everyone else in the bottom 99 percent. “By focusing on incomes, the tax system largely misses the massive amount of wealth this tiny sliver of ultra-rich families has accumulated,” write the lawmakers.
An analysis by progressive University of California, Berkeley, economists Gabriel Zucman and Emmanuel Saez found that, in 2019, the bottom 99 percent of families owed 7.2 percent of their wealth in taxes while the top 0.1 percent owed only 3.2 percent of their wealth. The wealth tax will help to close the gap between the wealthiest Americans and the rest of the country and will especially help to close the racial wealth gap, they say.
“A wealth tax is popular among voters on both sides for good reason: because they understand the system is rigged to benefit the wealthy and large corporations,” said Senator Warren in a statement. “As Congress develops additional plans to help our economy, the wealth tax should be at the top of the list to help pay for these plans because of the huge amounts of revenue it would generate.”
Warren emphasized that the plan could pay for popular items on President Joe Biden’s agenda like education and infrastructure investments. Over a decade, Saez and Zucman say, the tax could raise over $3 trillion in revenue.
Progressives have been calling for more taxation on the wealthy for years, including a wealth tax and higher marginal tax rates. Progressives like Rep. Alexandria Ocasio-Cortez (D-New York), who proposed a 70 percent marginal tax rate on the nation’s richest individuals, argue that higher taxes on wealthy individuals and households could pay for public programs like Medicare for All, free public college and a Green New Deal.
Since the idea of the wealth tax was first introduced into the mainstream political sphere, it has been shown to be very popular: A poll by Data for Progress from last year showed that 62 percent of voters are in favor of a wealth tax on households worth over $50 million, and voters from both parties are more likely to vote for a candidate who proposes a wealth tax.
At a press conference for the introduction of the wealth tax proposal, Representative Boyle pointed out that the idea of a wealth tax isn’t as new as it may seem — a property tax is a similar concept, he argues. But, while many Americans in the bottom 99 percent have been paying this form of a wealth tax over the past decades, the rich have only gotten richer.
Economists Zucman and Saez found that, between the 1970s and 2019, the wealthiest top 0.1 percent have seen their wealth nearly triple. Part of what has allowed wealthy Americans to accumulate so much wealth over the past decades is 50 years of tax cuts in the U.S. that have benefited only the rich, a recent study found.
Though the wealth tax is unlikely to be passed, the idea has gained momentum in recent years. With her position on the powerful Senate Finance Committee, Warren has more sway over tax policy than ever.
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