The bill aims to raise $ 3 billion to rebuild the economy and fight inequality by levying an annual tax of 2% on the net worth of households and trusts between $ 50 million and $ 1 billion. Billionaires will face a 3% tax.
“We designed this wealth tax by building on the experiences of other countries that have compiled a wealth tax and have not always been successful,” Warren said in the interview. “We saw where the flaws were, and made sure we sharpened them.”
$ 100 billion for IRS to fight tax fraud
Critics argue that taxing wealth would be challenging, if not unconstitutional. There is particular concern about how to value assets and to prevent rich people from hiding cash abroad
“People say, ‘Well, rich people cheat so we should not even try to use a wealth tax,'” Warren said. “But if rich people cheat, it does not mean that we just have to give up and pay their taxes at lower rates than everyone else. It means that we have to appoint more enforcement and that they have to follow the rules.”
Warren’s wealth tax comes with teeth.
The legislation has a built-in audit rate of 30%, which means that almost a third of all families would be audited every year. And the bill calls for an increase in the IRS budget by $ 100 billion to build the agency’s audit power and modernize IT systems.
The Warren Plan also proposes that a 40% ‘exit rate’ on the net worth of more than $ 50 million of any U.S. citizen who renounces their citizen avoid paying the tax.
“After you have introduced the wealth tax, it is not very difficult to monitor year after year. If you owned real estate last year, you must own the same property this year or have a lot of cash that you took in a sale,” he said. Warren said.
Fairness in the tax system
Asked if President Joe Biden has an appetite for a wealth tax, White House press secretary Jen Psaki said during Monday’s press release that Biden “strongly believes that the ultra-rich and corporations should finally start paying their fair share.”
“He has put out a lot of ideas and when we get to the point in our agenda, he will look forward to working with them. [Warren] and others in Congress, ”Psaki said.
In other words, the White House did not rule it out.
Last year, the bottom 99% of households, according to Warren, paid about 7.2% of their total wealth in taxes. However, the top tenth of 1% paid only 3.2% of their wealth in taxes.
Warren said there is dual support among voters for a wealth tax, including a majority of independents and Republicans.
“They understand how unfair the current system is,” she said.
The $ 15 minimum wage battle
“I would be happy to see how we pass the minimum wage through reconciliation,” Warren said, referring to the budget process that requires only a simple majority. “And I will fight for it.”
When asked about Manchin and other moderates who oppose popular measures such as the $ 15 minimum wage, Warren focused on where the Democrats agree.
“Democrats want to see us raise the minimum wage,” she said. “We need to talk more precisely about what the level is and how to do it. But we want the minimum wage to rise.”