Jeff Bezos would pay more than $ 5 billion a year under Warren’s wealth tax

Jeff Bezos owes $ 5.7 billion in taxes for 2020 under the Ultra-Millionaire Tax Act proposed Monday by a group of Senate and House Democrats.

Senator Elizabeth Warren, D-Mass .; Sen. Bernie Sanders, I-Vt., And others announced their proposed wealth tax on Monday, saying it would generate trillions in much-needed revenue and help reduce a distribution of wealth that only widened during the pandemic. The tax is an annual levy of 2% on wealth of more than $ 50 million and 3% on wealth of more than $ 1 billion.

Warren said the tax would affect only the richest 100,000 American families – or the highest 0.05% – and that it would raise about $ 10 billion over ten years. She said the extra income would help pay for childcare, education infrastructure and clean energy. It’s essentially the same tax that Warren advocated during her campaign, when the slogan ‘two cents’ became a popular rally at her rallies among those who support the tax. Warren often argues that since the wealth tax rate is 2%, “it’s only two cents per dollar to $ 50 million.”

Warren said the tax was even more urgent during the Covid crisis because it exposed and accelerated the prosperity gap of America.

“We do understand the direction we are going. This pandemic has created more billionaires. The people at the top are not barely hanging on to their fingernails,” Warren said on CNBC’s Squawk Box on Tuesday.

Critics say that the tax may not be constitutional and that the rich can play it easy. Most European countries have abandoned wealth taxes because they generated less revenue than expected and could easily have been avoided by millionaires and billionaires.

“The lesson from the experiences of other countries with wealth taxes should serve as a warning that the US should avoid adopting one in the first place,” said Erica York of the Conservative Tax Foundation. ” A tax on wealth will be experienced with many administrative and compliance issues, as well as avoidance and evasion issues. It would be a huge administrative challenge to carry out, and it is not clear, even with more resources, that the IRS would be able to collect a wealth tax effectively. ‘

To combat evasion, the tax on the Ultra-Millionaire would provide $ 100 billion to the Internal Revenue Service for stronger enforcement. It also includes a minimum audit rate of 30% for households with $ 50 million or more of assets, as well as new technological tools to help the IRS assess assets such as art or real estate. Those trying to relocate to another country and relinquish their citizenship to avoid taxes, the proposal also includes a 40% exit tax on those trying to leave.

“The implementation section is a lot easier than it looks,” Warren said. “We have learned from some of the mistakes they have made in Europe. This version of the wealth tax covers all your property. It does not matter if it is kept in stock or in real estate or in racehorses. Everything is covered, so “There’s no point in moving property. Wherever you keep it, it’s covered, whether you have it here in the US or you own it in the Cayman Islands.”

About half of the tax revenue comes from billionaires, who according to Warren added more than $ 1 billion to their wealth during the pandemic. According to calculations by the Institute for Policy Studies, Jeff Bezos, the richest person in the world, would owe $ 5.7 billion by 2020 under the tax of the ultra-millionaire. According to the analysis, it would still have a net worth of more than $ 185 billion.

Elon Musk would owe $ 4.6 billion by 2020 and would have another fortune of more than $ 148 billion by the end of the year. Bill Gates would have to pay $ 3.6 billion for 2020 and Mark Zuckerberg would have to pay $ 3 billion.

“The wealth tax on billionaires alone would fund nearly three-quarters of President Biden’s entire $ 1.9 billion pandemic rescue package, which is currently pending before the Senate,” said Chuck Collins, director of the Institute for Policy Studies’ Inequality Program. .