Jeff Bezos, founder and CEO of Amazon, speaks to a group of Amazon workers which might be veterans throughout an Amazon Veterans Day celebration on Monday, November 12, 2018.
Leonard Ortiz | Digital First Media | Getty Images
Sens. Elizabeth Warren, D-Mass., Sanders, I-Vt., and others unveiled their proposed wealth tax, saying it would increase trillions in much-needed income and assist scale back a wealth divide that has solely grown wider throughout the pandemic. The tax would be a 2% annual levy on wealth over $50 million and three% on wealth over $1 billion.
Warren mentioned the tax would solely have an effect on the wealthiest 100,000 American households — or the highest 0.05% — and would increase about $Three trillion over 10 years. She mentioned the added income would go to assist pay for baby care, schooling infrastructure and clear vitality. It is basically the identical tax that Warren championed throughout her presidential marketing campaign, when the slogan “Two cents” grew to become a well-liked rallying cry amongst those that supported the tax. Warren usually argues that because the proposed wealth tax fee would be 2%, “It’s only two cents on every dollar after $50 million.”
Warren mentioned the tax is much more pressing through the Covid disaster, because the pandemic has uncovered and accelerated America’s wealth hole.
“We do understand the direction we’ve been going. This pandemic has created more billionaires. The people at the top are not barely hanging on by their fingernails,” Warren mentioned on CNBC’s “Squawk Box” on Tuesday.
Critics say the tax might not be constitutional and would be simply gamed by the rich. Most European nations have deserted wealth taxes since they raised much less income than anticipated and had been simply prevented by millionaires and billionaires.
“The lesson from other countries’ experiences with wealth taxes should serve as a warning that the U.S. should avoid adopting one in the first place,” mentioned Erica York of the conservative-leaning Tax Foundation. “A wealth tax would be plagued with many administrative and compliance problems as well as avoidance and evasion issues. It would be an enormous administrative challenge to implement, and it is not clear, even with more resources, that the IRS would be able to collect a wealth tax efficiently.”
To fight evasion, the Ultra-Millionaire tax would present $100 billion to the Internal Revenue Service for stronger enforcement. It would additionally embrace a 30% minimal audit fee for households with $50 million or extra in belongings, in addition to new know-how instruments to assist the IRS worth hard-to-appraise belongings comparable to artwork or actual property. For those that would search to maneuver to a different nation and resign their citizenship to keep away from the tax, the proposal additionally consists of a 40% “exit tax” on those that attempt to go away.
“The implementation part is really a lot easier than it looks,” Warren mentioned. “We learned from some of the mistakes they made in Europe. This version of the wealth tax covers all of your property. It doesn’t matter if it’s held in stock or in real estate or in racehorses. Everything is covered, so there’s no point in moving property around. Also wherever you hold, it is covered, whether you hold it here in the U.S., whether you hold it in the Cayman Islands.”
About half of the income from the tax would come from billionaires, who Warren mentioned had added greater than $1 trillion to their wealth through the pandemic. According to calculations from the Institute for Policy Studies and Americans for Tax Fairness, Jeff Bezos, the world’s richest particular person, would owe $5.7 billion in 2020 under the Ultra-Millionaire tax. He nonetheless would have been left with a web value of greater than $185 billion after the tax, in line with the evaluation.
Elon Musk would owe $4.6 billion in 2020 and would nonetheless have a fortune of over $148 billion on the finish of the year. Bill Gates would should pay $3.6 billion for 2020, and Mark Zuckerberg would should pay $3 billion.
“The wealth tax on billionaires alone would fund almost three-quarters of President [Joe] Biden’s entire $1.9 trillion pandemic rescue package, currently pending before the Senate,” mentioned Chuck Collins, director of the Program on Inequality of the Institute for Policy Studies.