Like the coronavirus pandemic as it devastated the economy and excessively affected the lower-income Americans, the super-rich saw their prosperity increase. Senator Elizabeth Warren of Massachusetts, who has long called for a wealth tax, on Monday unveiled legislation that would tax the super-rich on their net worth.
The proposal, called the Ultra-Millionaire Tax Act, which was released along with Congresswoman Pramila Jayapal of Washington and Congresswoman Brendan Boyle of Pennsylvania, would impose an annual tax of 2% on households and trusts between $ 50 million and $ 1 billion instead. It will also place an annual surcharge of 1% on households and trusts of more than $ 1 billion. Legislators say the move will level the playing field and reduce the racial wealth gap.
“This is a wealth tax that has been needed for a long time. We need it to generate more revenue, to create more opportunities in the Americans,” Warren said. “But it is a wealth tax that we especially need because of the changes in the country under the pandemic. We have seen the wealth of the billionaire class in America increase by more than a trillion dollars over the past year.”
Warren has been a big proponent of a wealth tax for some time, making it one of her distinctive policy platforms on the campaign when she was elected president in 2020. ‘Two cents’ – referring to the two cents tax that an ultra-healthy taxpayer would owe every dollar – even adorned her campaign and was rumored at rallies. The bill is now one of her first moves as a new member of the Senate Finance Committee.
About 100,000 U.S. families would be liable for the ultra-millionaire tax, according to an analysis by economists from the University of California-Berkeley. They also estimate that it would generate an estimated ten billion dollars in revenue over ten years without raising taxes on 99.95% of U.S. households, which have a net worth of less than $ 50 million.
“Today, the richest 1% own 75% of the country’s wealth and the richest 0.1% – that’s zero point – one percent – own more than 18% of America’s wealth,” Jayapal said. “Then just compare it to the entire lower half of Americans who own only 1.5% of the wealth.” Jayapal also noted that the racial wealth gap with white families has an average wealth that is 14 times that of black families and eight times as much as Spanish families.
The group of lawmakers argues that the wealth tax should be at the top of the list to help pay for plans, as the United States has exhausted the economic crisis from the coronavirus pandemic with funds for child care and early education, infrastructure and others. priorities.
“I realize we’re going to have to go to revenue at some point. Well, here’s a fair way to do that,” Boyle said, acknowledging the recent spending on COVID. “It’s a much better way to earn an income than to tax the middle class and poor people in this country.”
It’s like the $ 1.9 billion US bailout plan passed home early Saturday and is on his way to the Senate. The White House said it would be the first legislation and would be followed by another with investments in long-term efforts such as infrastructure.
However, President Joe Biden did not support a wealth tax during the election, and his administration has already indicated that they are looking at other options to pay the cost of future investments. Last month, Treasury Secretary Janet Yellen said that a wealth tax ‘has very difficult implementation problems’. On several occasions, she and other Biden administration officials rather discussed the investigation into the corporate tax rate and loopholes.
At the same time, the imposition of a wealth tax will be difficult in the Senate. The Ultra-Millionaire Tax Act is consolidated by Democratic senators Bernie Sanders, Sheldon Whitehouse, Jeff Merkley, Kirsten Gillibrand, Brian Schatz, Ed Markey and Mazie Hirono. But if the chamber is split 50-50 along party lines, it could be a challenge to get a majority, let alone 60 votes. Warren called for the filibuster to be scrapped, citing the procedure to delay or block a vote, giving Senate Minority Leader Mitch McConnell a veto.
The number of countries with wealth taxes has fallen over the past thirty years. In 1990, 12 European countries had wealth taxes, but by 2018 it was three. Economists note that there are several challenges in estimating the income that a wealth tax will generate in part due to the valuation of assets.
“On the basis of equities, on the tax burden base, it can be very attractive. A large amount of money that affects relatively few taxpayers, all of which are at the very top of the wealth distribution,” said Janet Holtzblatt, a senior fellow at the Tax Policy Center. Urban-Brookings. “But it can have negative consequences if it harms the economy, if it harms investment, and it may not have as strong an effect as supporters want, because of ways to avoid and evade taxes.”
The Ultra-Millionaire Tax Act, as proposed, contains several provisions to block tax evasion, including a $ 100 billion investment in the Internal Revenue Service, a minimum audit rate of 30% for taxpayers who are subject to tax and a so-called exit tax of 40% on net. more than $ 50 million of Americans giving up their citizenship in an effort not to pay taxes.
“For any good tax, you want it to work without these extremely strict avoidance measures,” said Daniel Bunn, an economist at the Tax Foundation. “If you need such a fine figure to avoid avoidance, I would say you are probably misdesigning the tax to begin with.”
Bunn also notes that a wealth tax could allow foreign investors to replace homemade billionaires as owners of capital.
“If you reduce the return on wealth for U.S. citizens, and you do not have something similar for individuals with a high net worth investing in the U.S., you will eventually change the ownership structure of U.S. assets,” Bunn said. so instead of U.S. citizens owning many of the assets in the U.S. – whether it be housing or stocks or other assets – you are essentially creating a preference for foreign ownership through the tax code. ‘
But the idea of a general wealth tax does have great support in the United States. A Reuters / Ipsos poll last year found that nearly two-thirds of Americans strongly or somewhat agree that the rich should contribute more.