In one of her first moves as a new member of the Senate Finance Committee, Sen. Elizabeth Warren unveiled legislation this week that would introduce a tax on the net worth of the super-rich. As the coronavirus pandemic devastates the economy, disproportionately affecting lower-income households, the United States’ multi-millionaires and billionaires have actually seen their wealth increase exponentially. Warren now plans to combat that in a new proposal.
“This is a wealth tax that has been needed for a long time. We need it to produce more revenue, to create more opportunity in America,” Warren said in a statement. “But it is a wealth tax that we particularly need because of the changes in this country under the pandemic. We have watched the wealth of the billionaire class in America increase by more than a trillion dollars over the last year.”
The proposal, called the Ultra-Millionaire Tax Act, would introduce a 2% annual tax on households and trusts over $50 million. Once exceeding $1 billion, an additional 1% annual surtax would be added. So just to really clarify: If you do not make or have a net worth of $50 million or more, you will not be affected by this tax.
Warren and the group of lawmakers behind the wealth tax argue that it would go directly toward digging the U.S. out of the pandemic-induced economic crisis while also allocating funds toward infrastructural priorities like childcare and early education. If passed, it is estimated to generate $3 trillion in revenue over the next 10 years without raising taxes on 99.95% of American households. For reference, as a whole, that same percentage of U.S. residents does not have a collective net worth that would be enough to be subject to this tax, reports CBS.
But shortly after this legislation was announced, some hopped on Twitter to call it “political grandstanding,” or to remind people that the tax would keep happening every year, which amounts to a lot of money in the lifetime of a billionaire (which is kind of the point). Some argued that it would harm the businesses themselves and their employees. But one could argue that it does more harm to businesses and employees to keep a select few so wealthy that they couldn’t spend all their money in a lifetime if they tried.
The Ultra-Millionaire Tax Act was released by Warren alongside Reps. Pramila Jayapal and Brendan Boyle. It is co-sponsored by Democratic Sens. Bernie Sanders, Kirsten Gillibrand, Sheldon Whitehouse, Jeff Merkley, Brian Schatz, Ed Markey, and Mazie Hirono. With the 50-50 chamber split in the Senate, getting a majority — let alone a two-thirds majority — could prove exceptionally challenging.
However, even though there seems to be a contentious divide among politicians, the idea of a wealth tax actually has widespread support among the American people. A Reuters/Ipsos poll released last year showed that nearly two-thirds of Americans agreed that the very rich should be contributing more in taxes. This includes a majority of Republican voters.
Perhaps that is the two-thirds majority Congress should be paying attention to.