Massachusetts Senator Elizabeth Warren, Washington Rep. Pramila Jayapal, and Pennsylvania Rep. Brendan Boyle have proposed an ultra millionaire wealth tax in order to revive the economy and address income inequality. The tax is also firmly backed by Bernie Sanders. The Ultra Millionaire Tax Act, revealed on Monday morning, carries the conditions of a 2% annual tax on the net worth of households and trusts between $50 million and $1 billion, as well as a 1% annual surtax on assets above $1 billion, for a total of a 3% tax increase on billionaires. Approximately 100,000 American families would be subject to the Ultra-Millionaire Tax Act, and over 3 years, these additional taxes are projected to amount nearly $3 trillion over a decade. Warren stated the money collected from this proposal would go directly to child care, education, and infrastructure.
The bill is expected to face severe obstacles in the Senate, as some groups are predicting negative consequences from the taxation of America’s wealthiest homes. According to CNBC, a 2020 Tax Foundation analysis found the act would reduce U.S. economic output by 0.37% and 0.43% over the long term. The wealth tax would also face hardships on the administrative and compliance scale, as there would be a complex difficulty valuing assets as well as tax evasion schemes. However, Warren has included a dedication of $100 billion into IRS systems to ensure a 30% audit rate for the super wealthy, and the implementation of 40% exit wealth tax on Americans who seek to renounce their citizenship to avoid the wealth tax.
Although arguments regarding the constitutionality of the bill are quickly arising, The Hill reports that an outpour of support from law professors are becoming prevalent, as they are writing letters to Warren discussing the legality of the act. The Data for Progress also found that a majority of voters in the states that were previously surveyed supported a wealth tax, showing the gain of support for the notion across the country.
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