Mike Konczal at The Nation writes—A wealth tax is one of the most progressive government levies, falling entirely on the extremely wealthy.
Senators Elizabeth Warren and Bernie Sanders have proposed wealth taxes, with Warren’s taxing 2 percent of wealth for those worth over $50 million and 3 percent after the first $1 billion. Sanders’s plan would levy a 1 percent tax on households worth more than $32 million, with higher tax rates for the wealthiest—up to 8 percent for those with fortunes in excess of $10 billion.
Researched and defended by economists Gabriel Zucman and Emmanuel Saez, a wealth tax is one of the most progressive government levies available to us, falling entirely on the extremely wealthy. It would help with some of the evasion problems: Efforts to hide income as wealth would be rendered futile, as that fortune would be taxed anyway.
Experts are addressing objections to the wealth tax. There is a question of how to value wealth so it can be taxed and whether people would be liquid enough to pay these taxes. Fortunately, much wealth is in stocks and bonds, which are easily calculated. And the IRS can develop new evaluation techniques for other financial assets. Sanders and Warren want to increase the agency’s enforcement budget. Under Sanders’s plan, billionaires would be audited every year. And the liquidity issue of having the cash on hand to pay can be addressed by allowing limited deferrals with interest. Unlike many countries, the United States collects taxes from citizens overseas. It also has a wealth penalty it charges people who renounce their citizenship to avoid taxes, as some fear might happen if a wealth tax is implemented. Warren’s plan, for instance, would impose a 40 percent exit tax on Americans worth more than $50 million who give up their citizenship.
It is worth noting what kind of public program expansion could happen with this kind of revenue growth. Saez and Zucman said that a proposal like Warren’s would raise $2.75 trillion over 10 years and that Sanders’s could raise $4.35 trillion over the same period.