Jeff Bezos, founder and CEO of Amazon, speaks to a bunch of Amazon staff which can be veterans throughout an Amazon Veterans Day celebration on Monday, November 12, 2018.
Leonard Ortiz | Digital First Media | Getty Photographs
Jeff Bezos would owe $5.7 billion in taxes for 2020 beneath the Extremely-Millionaire Tax Act proposed by a bunch of Senate and Home Democrats on Monday.
Sen. Elizabeth Warren, D-Mass.; Sen. Bernie Sanders, I-Vt., and others unveiled their proposed wealth tax Monday, saying it could elevate trillions in a lot wanted income and assist scale back a wealth divide that has solely grown wider through the pandemic. The tax can be a 2% annual levy on wealth over $50 million and three% on wealth over $1 billion.
Warren mentioned the tax would solely have an effect on the wealthiest 100,000 American households — or the highest 0.05% — and would elevate about $3 trillion over 10 years. She mentioned the added income would go to assist pay for little one care, training infrastructure and clear power. It’s basically the identical tax that Warren championed throughout her marketing campaign, when the slogan “two cents” turned a well-liked rallying cry at her rallies amongst those that supported the tax. Warren typically argues that for the reason that wealth tax charge is 2%, “it is solely two cents on each greenback after $50 million.”
Accelerating wealth hole
Warren mentioned the tax is much more pressing through the Covid disaster because it has uncovered and accelerated America’s wealth hole.
“We do perceive the course we have been going. This pandemic has created extra billionaires. The individuals on the prime usually are not barely hanging on by their fingernails,” Warren said on CNBC’s “Squawk Box” Tuesday.
Critics say the tax may not be constitutional and would be easily gamed by the wealthy. Most European countries have abandoned wealth taxes since they raised less revenue than expected and were easily avoided by millionaires and billionaires.
“The lesson from other countries’ experiences with wealth taxes should serve as a warning that the U.S. should avoid adopting one in the first place,” said Erica York of the conservative-leaning Tax Foundation. “A wealth tax would be plagued with many administrative and compliance problems as well as avoidance and evasion issues. It would be an enormous administrative challenge to implement, and it is not clear, even with more resources, that the IRS would be able to collect a wealth tax efficiently.”
To combat evasion, the Ultra-Millionaire tax would provide $100 billion to the Internal Revenue Service for stronger enforcement. It would also include a 30% minimum audit rate for households with $50 million or more in assets, as well as new technology tools to help the IRS value hard-to-appraise assets like art or real estate. For those who would seek to move to another country and renounce their citizenship to avoid the tax, the proposal also includes a 40% “exit tax” on those who try to leave.
“The implementation part is really a lot easier than it looks,” Warren said. “We learned from some of the mistakes they made in Europe. This version of the wealth tax covers all of your property. It doesn’t matter if it’s held in stock or in real estate or in racehorses. Everything is covered so there’s no point in moving property around. Also wherever you hold, it is covered, whether you hold it here in the U.S., whether you hold it in the Cayman Islands.”
Billionaire tax bills
About half of the revenue from the tax would come from billionaires, who Warren said had added more than $1 trillion to their wealth during the pandemic. According to calculations from the Institute for Policy Studies, Jeff Bezos, the world’s richest person, would owe $5.7 billion in 2020 under the Ultra-Millionaire tax. He still would have been left with a net worth of more than $185 billion after the tax, according to the analysis.
Elon Musk would owe $4.6 billion in 2020, and would still have a fortune of over $148 billion at the end of the year. Bill Gates would have to pay $3.6 billion for 2020 and Mark Zuckerberg would have to pay $3 billion.
“The wealth tax on billionaires alone would fund almost three-quarters of President Biden’s entire $1.9 trillion pandemic rescue package, currently pending before the Senate,” said Chuck Collins, director of the Program on Inequality of the Institute for Policy Studies.