Sen. Elizabeth Warren, D-Mass., plans to introduce legislation Monday that would tax the net worth of the wealthiest people in America, a proposal aimed at persuading President Joe Biden and other Democrats to fund sweeping new federal spending programs by taxing the richest Americans.
Warren’s wealth tax would apply a 2% tax to individual net worth — including the value of stocks, houses, boats and anything else a person owns, after subtracting out any debts — above $50 million. It would add an additional 1% surcharge for net worth above $1 billion.
The proposal, which mirrors the plan Warren unveiled while seeking the 2020 presidential nomination, is not among the top revenue-raisers that Democratic leaders are considering to help offset Biden’s campaign proposals to spend trillions of dollars on infrastructure, education, child care, clean energy deployment, health care and other domestic initiatives. Unlike Warren, Biden pointedly did not endorse a wealth tax in the 2020 Democratic presidential primaries.
But Warren is pushing colleagues to pursue such a plan, which has gained popularity with the public as the richest Americans reap huge gains while 10 million Americans remain out of work as a result of the pandemic.
Polls have consistently shown Warren’s proposal winning the support of more than 3 in 5 Americans, including a majority of Republican voters.
“A wealth tax is popular among voters on both sides for good reason: because they understand the system is rigged to benefit the wealthy and large corporations,” Warren said. “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.”
She said she was confident that “lawmakers will catch up to the overwhelming majority of Americans who are demanding more fairness, more change, and who believe it’s time for a wealth tax.”
Biden did not propose any tax increases to offset the $1.9 trillion economic aid package that he hopes to sign later this month. Biden has said he will pay for long-term spending — as opposed to a temporary economic jolt — with tax increases on high earners and corporations.
Business groups and Republicans have already begun to raise concerns about Biden’s tax plans. Those same groups are not fans of Warren’s plan, which was a centerpiece of her 2020 Democratic presidential campaign.
Critics say the tax would be difficult for the federal government to calculate and enforce, that it would discourage investment and that it could be ruled unconstitutional by courts. Warren has amassed letters of support from constitutional scholars who say the plan would pass muster.
Warren estimated her initial proposal during the 2020 campaign would raise $2.75 trillion over a decade, which she proposed spending on education and child care, based on estimates from the University of California, Berkeley economists Emmanuel Saez and Gabriel Zucman.
The latest version, which would begin to apply in 2023 to net worth as calculated in 2022, would raise $3 trillion, Saez and Zucman calculate. Other economists, including Natasha Sarin of the University of Pennsylvania and Lawrence H. Summers of Harvard, estimate the tax would raise significantly less.
Zucman and Saez say the increase in their estimate is partly the product of a pandemic recession and recovery, which has enriched some of the wealthiest Americans and exacerbated wealth inequality.
“Wealth at the top, particularly among billionaires, has grown in the two years” since the 2019 estimate of Warren’s plan, Saez and Zucman write in a new estimate accompanying the bill.