Warren’s Plan Is Latest Push by Democrats to Raise Taxes on the Rich

WASHINGTON — Senator Elizabeth Warren of Massachusetts, a Democratic candidate for president, is expected to unveil a plan that would impose a new annual tax on the 75,000 wealthiest families in the United States.

Her plan is the latest sign of how Democrats, with an eye toward 2020, are looking to tax the rich to pay for expanded social programs and distribute wealth more evenly. In recent weeks other Democrats have called for increasing marginal income tax rates for the very rich, including Representative Alexandria Ocasio-Cortez, the freshman from New York who has proposed a 70 percent top rate on income exceeding $10 million a year.

Ms. Warren’s so-called ultramillionaire tax would levy a 2 percent annual tax on all assets — including stocks, real estate and retirement funds, held either in the United States or abroad — owned by households with a net worth of $50 million or more. It would add an additional 1 percent “billionaire surtax” on households with net worth exceeding $1 billion, a group that includes President Trump.

No assets would be exempt. The plan also calls for increased spending at the Internal Revenue Service to ensure that Americans are not evading the tax. And it would impose an “exit tax” on those seeking to avoid the wealth tax by renouncing their American citizenship.

The proposal would raise $2.75 trillion in tax revenue over a decade, according to calculations by Emmanuel Saez and Gabriel Zucman, two University of California-Berkeley economists whose work documents the growing concentration of wealth in the United States. Ms. Warren and her team consulted with Mr. Saez and Mr. Zucman in drafting the proposal, which seeks to establish a new measure of “progressivity” in taxation, based on what Americans own, not just what they earn.

“It’s time to fundamentally transform our tax code so that we tax the wealth of the ultrarich, not just their income,” Ms. Warren said on Thursday. “By asking our top 75,000 households to pay their fair share, my proposal will help address runaway wealth concentration and at the same time accelerate badly needed investments in rebuilding our middle class.”

Ms. Warren cited the economists’ finding that the richest 0.1 percent of Americans pay a lower percentage of their taxes, as a share of net worth, than the bottom 99 percent.

“We tax the very wealthiest less than everyone else because we tax income from capital and inheritances at much lower rates than income from good, old-fashioned hard work,” said Lily Batchelder, a New York University tax professor and former deputy director of the National Economic Council under President Barack Obama.

Democrats have long focused on income inequality and the rising concentration of wealth, but they have grown more vocal about the issue after the passage of Mr. Trump’s tax cuts, which delivered the bulk of their benefits to the highest-earning Americans.

Mr. Saez and Mr. Zucman’s work shows that the wealthiest 0.1 percent of families — roughly the group that would be hit by Ms. Warren’s proposed tax — now hold 20 percent of all wealth in the United States. Their share of the nation’s wealth has doubled since 1985. In a recent sign of billionaire prosperity, the hedge-fund manager Kenneth Griffin paid $238 million for a Central Park apartment this week, more than doubling the previous record for a home purchase in the United States.

The bottom 90 percent of Americans by net worth hold 25 percent of all wealth, combined, according to Mr. Saez and Mr. Zucman’s work. That is down from nearly 40 percent of all wealth in 1985.

While the idea of taxing wealthy Americans is resurgent, it is not unique: The top marginal income tax rate in the United States was as high as 91 percent in the early 1960s. Today, the top marginal income tax rate is 37 percent, down from 39.6 percent during Mr. Obama’s second term.

Ms. Warren appears to be the first declared Democratic candidate to release a plan for a wealth tax, but the idea is quickly gaining steam among liberal activists and policy experts. Two left-leaning think tanks, the Institute on Taxation and Economic Policy and the Washington Center for Equitable Growth, released wealth-tax-themed policy briefs this week in Washington.

In a sign of the idea’s rising currency with the Democratic establishment, Ms. Batchelder and another former economic adviser to Mr. Obama both praised the plan on Thursday. “The incidence of extreme wealth inequality — as well as the magnitude of never-taxed wealth — is just so obscene at this point in our nation that I think there is simply no choice but to explore a wealth tax like this,” said Gene Sperling, who directed Mr. Obama’s National Economic Council.

The projected revenue from Ms. Warren’s proposal would be enough to pay for several policy initiatives that she and other Democrats have proposed, including universal prekindergarten, a $1 trillion federal infrastructure spending push and widespread debt relief for student loans. But increasingly, liberal activists see taxing the incomes and the wealth of the rich as a policy goal in and of itself — in order to combat what they see as dangerous levels of inequality.

“Democracies become oligarchies when wealth is too concentrated,” Mr. Saez said in praising the plan. “A progressive wealth tax is the most direct policy tool to curb the growing concentration of wealth in the United States.”

Several European nations tax wealth, including Switzerland and Norway. The only current rate higher than the rate Ms. Warren is proposing is in Spain.

Conservative groups, business leaders and some other high-earning Americans have criticized Democrats’ calls for increased taxes on high incomes, saying they would dampen economic growth. Some of those same groups were quick to criticize Ms. Warren’s wealth-tax proposal on Thursday.

Kyle Pomerleau, an economist at the Tax Foundation, a Washington think tank that often promotes the economic benefits of tax cuts, said that a wealth tax would prove difficult to assess and enforce, and that it would disproportionately hit investments with normal returns, which are more sensitive to taxation — as opposed to returns that are outsize largely because of luck.

“I think it is a poorly targeted tax on capital,” he said.

Source link

more recommended stories

  • On Politics: Complete Coverage of the Mueller Report

    • Here are four dramatic passages.

  • Democrats Draw Closer to a Dicey Question: Whether to Impeach Trump

    WASHINGTON — House Democrats, facing some.

  • Right, Left and Center React to the Mueller Report

    Now that it is over, he.

  • Highlights: Barr Defends Trump Before Releasing Mueller Report – Video

    Channels & Shows Home Search U.S..

  • Watch Live: Barr Speaks Before Mueller Report Is Made Public – Video

    Channels & Shows Home Search U.S..

  • Democrats Are United on Climate Change, but Not on What to Do About It

    For Democrats vying to unseat President.

  • On Politics: Mueller Report to Be Released Today

    Good Thursday morning. Here are some.

  • Terry McAuliffe Will Not Run for President

    WASHINGTON — Former Gov. Terry McAuliffe.

  • E.P.A. Moves to ‘Close the Door’ on Asbestos. Consumer Groups Say Loopholes Remain.

    Want climate news in your inbox?.

  • On ‘Made in America,’ Trump’s F.T.C. Appointees May Be Out of Step With Him

    Two more companies, Sandpiper and PiperGear,.

  • In New Effort to Deter Migrants, Barr Withholds Bail to Asylum Seekers

    WASHINGTON — The Trump administration on.

  • Julián Castro Needs a Defining Moment. Has It Already Passed?

    Because Mr. Castro never ran for.

  • On Politics: Trump’s United Base of America

    While other presidents sought to broaden.

  • Court Rejects 2 Years of Judge’s Decisions in Cole Tribunal

    This article was produced in partnership.

  • How to Cover 2020: Assume Nothing and Beware of Twitter

    CHICAGO — Journalists have no idea.

  • For Democrats, Ilhan Omar Is a Complicated Figure to Defend

    WASHINGTON — When President Trump tweeted.

  • Gina Haspel Relies on Spy Skills to Connect With Trump. He Doesn’t Always Listen.

    WASHINGTON — Gina Haspel was trying.

  • Mick Mulvaney’s Master Class in Destroying the Government From Within

    The new agency had the feel.

  • On Politics: Trump’s Trade Style Could Cost U.S.

    • Oil purchases by China and.

  • The Rematch: Bernie Sanders vs. a Clinton Loyalist

    The blowup reflects ideological divisions among.

  • Trump Says He Will Give Tiger Woods the Presidential Medal of Freedom

    A day after Tiger Woods won.

  • Pete Buttigieg’s Campaign Kickoff: Full Speech, Annotated

    Pete Buttigieg, the mayor of South.

  • What’s a Feminist Government? Canada, and Trudeau, Grapple With the Question

    “I know some women who are.

  • Want to Escape Global Warming? These Cities Promise Cool Relief

    “We’re not seeing worse heat waves.

  • On Politics: Mayor Pete, the College Years

    • What drove Mr. Trump’s recent.

  • Trump’s 2020 Campaign Raises Over $30 Million in First Quarter

    President Trump raised more than $30.

  • Face It: You (Probably) Got a Tax Cut

    Studies consistently find that the 2017.

  • Mitch McConnell, Never a Grandstander, Learns to Play by Trump’s Rules

    WASHINGTON — President Trump was walking.

  • How Kamala Harris’s Income Compares to Those of Other Candidates

    Senator Kamala Harris of California disclosed.

  • Pete Buttigieg’s Focus: Storytelling First. Policy Details Later.

    Mr. Buttigieg has stirred suspicion among.

  • Julian Assange: Friend and Foe to Left and Right

    Over the years, the WikiLeaks founder.

  • Mnuchin Says China Trade Talks Are Nearing Final Round

    WASHINGTON — Treasury Secretary Steven Mnuchin.