Sen. Elizabeth Warren, D-Mass., holds a information convention to announce laws that will tax the web price of America’s wealthiest people on the U.S. Capitol on Mar. 1, 2021 in Washington.
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A slew of Democrats on Capitol Hill — together with progressives Sen. Elizabeth Warren, D-Mass., and Sen. Bernie Sanders, I-Vt. — on Wednesday proposed a 3% whole annual tax on wealth exceeding $1 billion.
They additionally known as for a lesser, 2% annual wealth tax on the web price of households and trusts starting from $50 million to $1 billion.
“The ultra-rich and powerful have rigged the rules in their favor so much that the top 0.1% pay a lower effective tax rate than the bottom 99%, and billionaire wealth is 40% higher than before the Covid crisis began,” Warren stated Wednesday in an announcement.
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About 100,000 Americans — or, fewer than 1 in 1,000 households — can be topic to a wealth tax in 2023, according to Emmanuel Saez and Gabriel Zucman, economists on the University of California, Berkeley.
The coverage would increase not less than $3 trillion over a decade, they discovered.
Warren known as for the tax revenues to be invested in baby care and early training, Okay-12 training and infrastructure.
Aside from Warren and Sanders, different co-sponsors of the laws embody: Sens. Sheldon Whitehouse, D-R.I.; Jeff Merkley, D-Ore.; Kirsten Gillibrand, D-N.Y.; Brian Schatz, D-Hawaii; Edward Markey, D-Mass.; and Mazie Hirono, D-Hawaii. Reps. Pramila Jayapal, D-Wash.; and Brendan Boyle, D-Pa., are additionally co-sponsors.
The invoice seemingly faces vital obstacles within the Senate, the place Democrats maintain the slimmest of majorities.
Some teams additionally forecast a wealth tax would have some destructive results.
A 2020 Tax Foundation analysis of separate Warren and Sanders wealth tax proposals throughout their presidential runs discovered they would scale back U.S. financial output by 0.37% and 0.43%, respectively, over the long run.
A wealth tax would additionally face administrative and compliance challenges, resembling issue valuing belongings and sure tax evasion schemes, based on the Tax Foundation.
The Ultra-Millionaire Tax Act would try to handle a few of these points.
The laws would make investments $100 billion into IRS methods and personnel, guarantee a 30% audit fee for the tremendous rich, and impose a 40% exit tax on rich Americans who search to surrender their citizenship to keep away from a wealth tax.