On Monday, several Democrats, headlined by Senators Elizabeth Warren, as well as reps Pramila Jayapal (Washington) and Brendan Boyle (Pennsylvania), and co-sponsored by Bernie Sanders, proposed a new tax that would take 3 percent annually on wealth that surpasses $1 billion, in addition to a 2 percent tax of households and trusts with wealth valued between $50 million and $1 billion.
The proposal, dubbed the Ultra-Millionaire Tax Act, has the stated goal of trying to somewhat close the increasing U.S. wealth gap. Warren also cited the COVID-19 pandemic as a factor that has caused that gap to continue to grow.
“The ultra-rich and powerful have rigged the rules in their favor so much that the top 0.1 percent pay a lower effective tax rate than the bottom 99 percent, and billionaire wealth is 40 percent higher than before the COVID crisis began,” said Warren in a statement.
“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,” Warren added. “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.”
The tax would be enforced on roughly 100,000 Americans as of 2023, according to a pair of University of California, Berkeley economists, CNBC reports. Those same economists, Emmanuel Saez and Gabriel Zucman, say it would net at least $3 trillion in a decade-long span.
Despite a very slim Democratic majority, the bill is almost certain to face significant obstacles in the Senate. There would also be compliance issues (see: exploiting loopholes to evade taxes), though the Act would attempt to cut those off with a $100 billion investment into the IRS that would bump up the audit rates for the super wealthy (to as many as 30 percent of those people) and a 40 percent exit tax that would snag funds from Americans renouncing their citizenship(s) to dodge the tax.