Sen. Elizabeth Warren, (D-Mass.) and other progressives introduced legislation to tax the net worth of the richest Americans on Monday, framing it as a way to fund the sweeping federal spending programs proposed by President Joe Biden and other Democrats.
The bill would impose a 2% annual tax on the net worth — the total value of assets after debts are subtracted — of households and trusts above $50 million.
A 1% surcharge would apply to those with net worth above $100 billion under the so-called Ultra-Millionaire Tax Act.
It would apply to the “wealthiest 100,000 households in America,” Warren, who joined the influential Senate Finance Committee this year, said in a statement.
The Biden administration has dismissed proposals for a wealth tax, complicating the path for the bill to become law.
KEY BACKGROUND
The proposal, which mirrors one outlined by Warren as a presidential candidate in 2020, comes as Democrats push forward with a $1.9 trillion package to stimulate the coronavirus-hit economy. With narrow Democratic majorities in both chambers of Congress, Biden has also rolled out proposals to spend big on education and infrastructure. The wealth tax legislation was introduced alongside Rep. Pramila Jayapal, (D-WA), and Rep. Brendan Boyle, (D-PA).
BIG NUMBER
$3 trillion. That’s how much the Ultra-Millionaire Tax Act is projected to raise over a decade, according to estimates from the Berkeley economists Emmanuel Saez and Gabriel Zucman. The researchers raised that estimate this year because “wealth at the top, particularly among billionaires, has grown” in part because of the Covid-19 pandemic, which has hit low-income earners and minorities particularly hard.
CHIEF CRITIC
Opponents of a wealth tax argue that it can pose legal and administrative issues for the government, raising questions over constitutionality and how net worth would be measured. Treasury Secretary Janet Yellen pointed to the “very difficult implementation problems” of such a proposal in an interview last week and said that the administration would instead consider tax increases on companies and capital gains.
TANGENT
Broad support for a wealth tax has emerged in recent years. A Reuters/Ipsos poll in January 2020 found that 64% of respondents said “the very rich should contribute an extra share of their total wealth each year to support public programs.” And there was not just agreement among Democrats in the poll — 53% of Republicans also supported a wealth tax. Cosponsors of the legislation include the 2020 presidential candidates Sen. Bernie Sanders (I-Vt.) and Sen. Kirsten Gillibrand (D-N.Y.) and others.
CRUCIAL QUOTE
“As Congress develops additional plans to help our economy, the wealth tax should be at the top of the list to help pay for these plans because of the huge amounts of revenue it would generate,” Warren said.
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