Senator Elizabeth Warren, D-Mass., Gives a press conference to announce legislation that would tax the net worth of America’s wealthiest individuals at the United States Capitol on March 1, 2021 in Washington.
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A number of Democrats on Capitol Hill – including progressive Senator Elizabeth Warren, D-Mass., And Senator Bernie Sanders, I-Vt. – on Wednesday he proposed a total annual tax of 3% on wealth in excess of $ 1 billion.
They also asked for a lower wealth tax of 2% per annum on the net worth of families and trusts ranging from $ 50 million to $ 1 billion.
The Ultra-Millionaire Tax Act aims to contain a growing wealth gap in the USA, which was exacerbated by the Covid pandemic.
“The ultra-rich and powerful have manipulated the rules to their advantage in such a way that the top 0.1% pay an effective tax rate lower than the bottom 99%, and the wealth of billionaires is 40% higher than before the start of the Covid crisis, “Warren said Wednesday in a statement.
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About 100,000 Americans – or less than 1 in 1,000 families – would be subject to a wealth tax in 2023, according to Emmanuel Saez and Gabriel Zucman, economists at the University of California, Berkeley.
The policy would raise at least $ 3 trillion over a decade, they found.
Warren called for tax revenues to be invested in childcare and early childhood education, K-12 education and infrastructure.
In addition to Warren and Sanders, other co-sponsors of the legislation include: Sens. Sheldon Whitehouse, DR.I .; Jeff Merkley, D-Ore .; Kirsten Gillibrand, DN.Y .; Brian Schatz, D-Hawaii; Edward Markey, D-Mass.; and Mazie Hirono, D-Hawaii. Reps. Pramila Jayapal, D-Wash.; and Brendan Boyle, D-Pa., are also co-sponsors.
The bill is likely to face significant obstacles in the Senate, where Democrats hold the smallest of majorities.
Some groups also predict that a wealth tax would have some negative effects.
A 2020 Tax Foundation analysis of separate income tax proposals from Warren and Sanders during their presidential elections concluded that they would reduce US economic output by 0.37% and 0.43%, respectively, in the long run.
A wealth tax would also face administrative and compliance challenges, such as difficulty assessing assets and likely tax evasion schemes, according to the Tax Foundation.
The Ultra-Millionaire Tax Act would attempt to resolve some of these issues.
The legislation would invest $ 100 billion in IRS systems and personnel, guarantee a 30% audit fee for the super-rich, and impose a 40% exit tax on wealthy Americans who seek to renounce their citizenship to avoid a tax about equity.