Sen. Warren Wants To Tax The Billionaires Who Got Richer While Americans Went Broke In 2020
“If your net worth is less than $50 million, you won’t pay a penny.”
Over the same time period that about 73 million Americans lost their jobs, billionaires in the U.S. increased their wealth by $1.3 trillion, according to Forbes and government data collected in the last year. The pandemic has only exacerbated the wealth gap — which is also a race and gender gap. So while millions of Americans are struggling to pay monthly rent, and millions have lost employer-sponsored health insurance, Sen. Elizabeth Warren (D-MA) and her Democratic colleagues want to pass a wealth tax that will affect only a tiny fraction of taxpayers and help provide some financial relief to the rest.
Warren introduced the Ultra-Millionaire Tax Act with seven Democratic co-sponsors in the Senate, including Sen. Bernie Sanders (I-VT). In the House, Reps. Pramila Jayapal (D-WA) and Brendan Boyle (D-PA) introduced the legislation.
"As working families struggle to put food on the table, keep the heat on, and pay the rent during this devastating economic crisis that has caused the poverty rate to jump by the largest amount in at least 60 years, the rich have only gotten richer and the wealth of billionaires has jumped by 40%," Rep. Jayapal said in a statement. She continued: "The Ultra-Millionaire Tax Act will help level the playing field, narrow the racial wealth gap, ensure the wealthiest finally begin to pay their fair share, and invest trillions of dollars into our communities so we can make a real difference in the lives of people across America."
Multiple polls show that a majority of Americans support a wealth tax. Warren said it’s “popular among voters on both sides for good reason: because they understand the system is rigged to benefit the wealthy and large corporations.”
Progressive economists and groups praised the proposal, which has been endorsed by 29 policy and union groups including the American Federation of Teachers, the Working Families Party, and more.
Warren, Jayapal, and Boyle are clear about who the act will affect: only the wealthiest 0.05% of Americans, the “ultra millionaires” referenced in the title. That includes “centi billionaires” Jeff Bezos, Elon Musk, and Bill Gates — some of the richest people in the world — whose respective net worths exceeded $100 billion by the end of 2020. Mark Zuckerberg is just behind them.
“If your net worth is less than $50 million, you won’t pay a penny,” Jayapal tweeted, while Warren said “We need a #WealthTax so the richest Americans pay taxes on all their wealth — like their stock portfolios, diamonds, yachts, and art collections.”
While congressional Republicans have been quibbling over $1,400 stimulus checks and a $15/hour minimum wage that a majority of Americans support, according to multiple polls, a recent report from Americans for Tax Fairness and the Institute for Policy Studies found that the proposed wealth tax would have raised $114 billion in 2020. The report says “the combined fortune of the nation’s 664 billionaires at market close [on Feb. 19, 2021] was $4.3 trillion, up 44% from their collective net worth of just under $3 trillion on March 18, 2020, the rough start of the pandemic crisis.”
The above chart from the two organizations shows that centi-billionaires like Bezos, Musk, and Gates, would remain in the $100+ billion bracket even after Warren’s wealth tax.
“This is money that should be invested in child care and early education, K-12, infrastructure, all of which are priorities of President Biden and Democrats in Congress,” Warren said in a statement Monday.
How would the proposed wealth tax work?
According to the legislation, the federal government would implement a 2% annual tax on the net worth of households and trusts between $50 million and $1 billion. Households and trusts worth more than $1 billion would pay a 1% annual surtax, or 3% overall tax.
"I recognize that at some point we are going to have to turn to revenues. Well, here is a fair way to do it," said Rep. Boyle. "This is a hell of a lot better way to get revenue than taxing middle class and poor people in this country."
Warren added: “We do understand the direction we’ve been going. This pandemic has created more billionaires. The people at the top are not barely hanging on by their fingernails.”
An independent analysis of the bill from University of California-Berkeley economists Emmanuel Saez and Gabriel Zucman found that 99.95% of American households would not be affected.
As for the millionaires and billionaires who may want to dodge new taxes — though notably Warren Buffet or Bill Gates have said the rich should be taxed more — the authors of the legislation point out that it includes “robust anti-evasion and avoidance measures,” like a $100 billion investment to “rebuild and strengthen the IRS” (which has suffered from a lack of funding and support for many years) and a 40% “exit tax” on U.S. citizens who renounce their citizenship in order to avoid the wealth tax.
Sen. Warren recently joined the Senate Finance Committee, and on Tuesday she was named chairperson of two subcommittees: the Banking, Housing, and Urban Affairs Subcommittee on Economic Policy, and the Subcommittee on Fiscal Responsibility and Economic Growth.
“I'll continue to push for racial and economic justice and lasting economic security for families,” Warren said in a statement Tuesday. “I'll also use these committees to hold big corporations and their executives accountable and to strengthen our banking, securities, and tax laws --- and make sure they are enforced.”
In classic Warren fashion, she concluded: “Let's get to work!"