Sen. Elizabeth Warren (D-Mass.) has joined the Senate Finance Committee and plans on proposing a wealth tax that she initially introduced during her 2020 presidential campaign bid. She states on her website, “I’m very pleased to join the Finance Committee, where I’ll continue to fight on behalf of working families and press giant corporations, the wealthy, and the well-connected to finally pay their fair share in taxes.”
Warren’s wealth tax plan would place a 2 percent tax on assets over $50 million which would rise to a higher percentage for those who have assets over $1 billion. The higher percentage of assets over $1 billion is currently undecided at the time of reporting.
The tax would be levied on assets above the $50 million mark which would mean a tax filer with $60 million in assets would have the tax applied to $10 million. Because the tax would be on assets and not earnings, if an ultra-wealthy individual retired, the person would pay the tax on assets above $50 million even though they did not earn income from a job.
10-year wealth tax
The Senator’s plan would raise $2.75 trillion in tax revenue over a decade and would apply to less than .01 percent of American households or roughly 75,000 families. The tax burden would increase from 3.2 to 4.3 percent for the targeted group. When asked if this tax would encourage wealthy households to leave the U.S. for locations favorable to their assets, Warren stated in an interview with CNBC that “there is no evidence that anyone is going to leave this country because of a 2-cent wealth tax. Several nations have far higher tax rates, in addition to wealth taxes, so it’s not clear where they would go.”
Warren plans to use the collected wealth tax revenue to benefit expanded social programs and redistribute capital from the top earners to working class families. She states, “Our to-do list is long. We must provide immediate relief for families struggling under the weight of twin health and economic crises. We must make health care in America a human right and expand public programs like Medicaid and lower the Medicare eligibility age. And we must ensure those at the very top actually pay their fair share to keep America strong — including a wealth tax on fortunes over $50 million to fund needed investments for working families.”
Other Democrat tax proposals
Sen. Dick Durbin (D-IL) and Rep. Cindy Axne (D-IA) introduced legislation on Feb. 2 to exempt taxes on the first $10,200 collected on unemployment benefits in 2020. This plan is similar to the 2009 American Recovery and Reinvestment Act (ARRA) that waived taxes on unemployment collected up to $2,400 in the aftermath of the global recession. The latest legislation, called the Coronavirus Unemployment Benefits Tax Relief Act, has been cosponsored by Warren.
President Biden’s expected tax plan differs from Warren’s as his approach would tax capital gains of millionaires as regular income and raise taxes on individuals making more than $400,000 a year. In contrast to Sen. Warren’s projected tax revenue income from her proposed wealth tax of $2.7 trillion over a decade, Biden’s plan would raise $3.35 trillion to $3.67 trillion, from corporations, wealthy individuals and payroll tax, over the same time period, according to the Committee for a Responsible Federal Budget.