By Chuck Collins
This week, Democratic Sen. Elizabeth Warren of Massachusetts introduced the Ultra-Millionaire Tax Act, an annual wealth tax on households with more than $50 million. Lead sponsors in the House are Democratic Reps. Pramila Jayapal of Washington and Brendan Boyle of Pennsylvania.
“The ultrarich and powerful have rigged the rules in their favor so much that the top 0.1% pay a lower effective tax rate than the bottom 99%, and billionaire wealth is 40% higher than before the COVID crisis began,” Warren explained .
Around two-thirds of Americans , including majorities of both Democrats and Republicans, said they supported a wealth tax in a January survey. “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,” Warren said.
About 100,000 would feel the tax
Under the Warren-Jayapal-Boyle bill, the richest 100,000 Americans would be subject to an annual tax of a few pennies on the dollar on their great fortunes.
The tax rate would be just 2 cents on the dollar, or 2%, for people with wealth between $50 million and $1 billion. It would rise to just 3 cents on the dollar, or 3 percent, for wealth above the $1 billion threshold.
Only the country’s 650 or so billionaires would pay the 3% rate.
It makes sense to tax billionaires to pay for the immediate-term pandemic recovery, as well as for longer-term investments in infrastructure, health care, and education. As hundreds of thousands of Americans lost their lives, and millions lost their livelihoods, U.S. billionaires have seen their combined wealth increase $1.3 trillion over the last 11 months, an increase of 45%.
650 own more than 165 million
U.S. billionaires now have a combined wealth of $4.2 trillion. That’s nearly double the wealth owned by the bottom half of all U.S. households—165 million people combined—who collectively own just $2.4 trillion, according to the Federal Reserve.
Taxing these wealth gains would make an enormous difference for our pandemic recovery. If the ultra-millionaire wealth tax had been in effect for 2020, America’s billionaires would have paid about $114 billion —less than 10% of their 2020 wealth gains.
Over the next 10 years, U.S. billionaires would pay an estimated $1.4 trillion of the roughly $3 trillion in new revenue that would be raised by the wealth tax, according to an analysis by the Institute for Policy Studies (IPS) and Americans for Tax Fairness (ATF).
The U.S. is not alone in considering a wealth tax in the face of rapidly concentrating wealth. Around the world, countries are debating wealth taxes on surging billionaire assets. The U.K. recently established a commission to explore a wealth tax. Argentina has approved a wealth tax and Bolivia is considering one to help pay for economic recovery.
The Warren-Jayapal-Boyle legislation is consistent with historical tax policies to “conscript wealth” during times of crisis and war. The U.S. levied inheritance and estate taxes during the Civil War, the Spanish-American War, and the World War I, then made income and estate taxes permanent in 1916.