Senator Elizabeth Warren, D-Mass., Is holding a news conference announcing legislation that would tax the net worth of America’s richest individuals on March 1, 2021 in Washington in the U.S. Capitol.
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A whole bunch of Democrats on Capitol Hill – including progressive Senator Elizabeth Warren, D-Mass., And Senator Bernie Sanders, I-Vt. – on Wednesday proposed a total annual tax of 3% on wealth of more than $ 1 billion.
They also called for a 2% annual wealth tax on the net worth of households and trusts, ranging from $ 50 million to $ 1 billion.
The tax law on ultra-millionaires is aimed at widening the wider wealth gap in the US, exacerbated by the Covid pandemic.
“The ultra-rich and powerful have set the rules in their favor so that the best 0.1% pay a lower effective tax rate than the bottom 99%, and the billionaires’ wealth is 40% higher than before the Covid crisis began. has, “Warren said. Wednesday in a statement.
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According to Emmanuel Saez and Gabriel Zucman, economists at the University of California, Berkeley, about 20,000 Americans – or less than 1 in 1,000 families – would be subject to a wealth tax by 2023.
The policy will raise at least $ 3 billion over a decade, they found.
Warren called for the tax revenue to be invested in childcare and early education, K-12 education and infrastructure.
Apart from 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 major obstacles in the Senate, where Democrats have the smallest majority.
Some groups also predict that a wealth tax will have negative consequences.
In a 2020 tax assessment analysis of separate proposals for wealth tax from Warren and Sanders during their presidential runs, it was found that it would reduce U.S. economic production by 0.37% and 0.43%, respectively, in the long run.
According to the Tax Foundation, there will also be administrative and compliance taxes, such as problems with the valuation of assets and possible tax evasion schemes.
The Ultra-Millionaire Tax Act will try to address some of these issues.
The legislation would invest $ 100 billion in IRS systems and staff, ensure a 30% audit rate for the super-rich, and impose a 40% exit tax on wealthy Americans who wanted to renounce their citizenship to avoid a wealth tax.