Do You Have $50 Million? If You Do, Congratulations... And Your Taxes May Go Up Ever So Slightly

"Get With The Program" by Nancy Ohanian

This morning, Elizabeth Warren and Pramila Jayapal in the House unveiled a bicameral Ultra-Millionaire Tax bill, which features a 2% annual tax on the net worth of households and trusts between $50 million and $1 billion and a total 3% annual tax on the net worth of households and trusts above a billion. The idea is to level the playing field and narrow the racial wealth gap by asking the wealthiest 100,000 households in America, or the top 0.05%, to pay their fair share. The Ultra-Millionaire Tax would bring in at least $3 trillion in revenue over 10 years-- without raising taxes on the 99.95% of American households that have net worth below $50 million.

Pramila made the case in a press release this morning: "As working families struggle to put food on the table, keep the heat on, and pay the rent during this devastating economic crisis that has caused the poverty rate to jump by the largest amount in at least 60 years, the rich have only gotten richer and the wealth of billionaires has jumped by 40%. The Ultra-Millionaire Tax Act will help level the playing field, narrow the racial wealth gap, ensure the wealthiest finally begin to pay their fair share, and invest trillions of dollars into our communities so we can make a real difference in the lives of people across America."

Elizabeth Warren, the chief Senate sponsor, pointed out that "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. A wealth tax is popular among voters on both sides for good reason: because they understand the system is rigged to benefit the wealthy and large corporations. 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. 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. I'm confident lawmakers will catch up to the overwhelming majority of Americans who are demanding more fairness, more change, and who believe it's time for a wealth tax."

Warren's original Senate co-sponsors are Bernie, of course, plus Jeff Merkley (D-OR), Mazie Hirono (D-HI), Brian Schatz (D-HI), Ed Markey (D-MA), Sheldon Whitehouse (D-RI) and Kirsten Gillibrand (D-NY). Merkley's statement this morning: "When I was growing up, my dad's job as a union machinist was enough to buy a modest house, pay our family's bills, and take us on annual camping vacations. But since then, costs have gone through the roof and wages have stayed the same, making stories like my family's fewer and farther betwee. The powerful and privileged have spent decades bending Congress around their wishes to give themselves tax giveaway after giveaway, while cutting investments in the things working families need to thrive, like living wage jobs, affordable health care, a good education, and a home they can afford. We need to level the playing field, and that means the richest of the rich must pay their fair share in taxes, just like working families already do."

Pramila found a more conservative member, New Dem Brendan Boyle (Philly) to co-sponsor the bill in the House with her. "The hyper concentration of wealth among a tiny number of multimillionaires and billionaires is a crisis for American capitalism and the American Dream," he said. "Wealth inequality is at its highest level since the Gilded Age. The wealth share of the richest 0.1% has nearly tripled since the late 1970s. It is time for the ultra-millionaires to pay their fair share so that critical government programs can be bolstered to help the everyday American. Our proposal will make a meaningful difference in the lives of Americans who need the most help and bolster our country's shrinking middle class." The other original House co-sponsors, as of this morning, were Barbara Lee (D-CA), Eleanor Homes Norton (D-DC), Ilhan Omar (D-MN), AOC (D-NY), Cori Bush (D-MO) and Mark Takano (D-CA).

Although neither of California's senators have signed on as co-sponsors yet, UC, Berkley economists Emmanuel Saez and Gabriel Zucman said something Feinstein and newly-appointed Alex Padilla should pay close attention to: "Wealth at the top has boomed during the COVID crisis. Billionaires' wealth has literally exploded while many Americans struggle with job and income loss. The ultra-millionaire wealth tax is the most direct and powerful tool to curb growing wealth concentration in the US and make sure the ultra-wealthy pay their fair share in taxes. It will also bring substantial and much needed tax revenue to address the many challenges the country is facing."

Over the summer, Data for Progress did polling on a wealth tax for the very rich in 11 states with 2020 Senate contests: Arizona, North Carolina, Iowa, Maine, Georgia, Colorado, Texas, Kansas, Kentucky, Michigan and Mississippi. They reported that "Among voters in all 11 of these states, 61 percent said they’d be more likely to vote for a candidate who supports a wealth tax, while only 19 percent said they’d be less likely to. In both Maine and Iowa, 69 percent of voters said they’d be more likely to vote for a candidate who supports a wealth tax, while only 16 and 17 percent, respectively, said they’d be less likely to do so. In Arizona, North Carolina, and Texas, meanwhile, attitudes are similar. In Texas, for example, 61 percent said they’d be more likely to support a Senate candidate who backs a wealth tax while 25 percent said they’d be less likely. Even in Mississippi, a majority of voters (51 percent) of voters said they’d be more likely to vote for a candidate that calls for implementing a tax on wealth." when they asked specifically about a wealth tax on individuals with a net worth over $50 million, this was the state by state breakdown (Texas wasn't polled on this question but 43% of Texas voters supported the overall concept of a wealth tax and 41% opposed it.) It's also worth mentioning that centrist Democrats who lost in Iowa, North Carolina, Texas, Maine, Kansas, Kentucky and Mississippi, would not go near the proposal and may have won if they did-- especially in Iowa and North Carolina, where voters rejected Schumer's handpicked conservative Democrats.

I asked some of the congressional candidates who have been endorsed by Blue America this cycle. First one who got back with me (pre-dawn) was Jason Call up in a Washington district in Pramila's neighborhood. Although the current incumbent, New Dem Rick Larsen, will probably never sign onto the bill unless voters force him to, Call told me that "With the most regressive state tax system in the nation-- high sales taxes and no income tax-- Washington has long been attractive to the very wealthy. Local efforts by Socialist Seattle Councilmember Kshama Sawant to Tax Amazon to fund social services have been met with public support but strongly opposed by business interests. This bill would be popular with the average Washingtonian who continues to feel the increasing cost of living squeeze, however we must reject the notion that the federal government must tax the rich in order to pay for things. We must tax the rich to reduce the unhealthy effects of income inequality."

McKayla Wilkes and Colin Byrd are both taking on non-co-sponsor Steny Hoyer in Maryland. McKayla told me that "The Ultra-Millionaire Tax is both good policy and good politics. It is crucial that the extremely wealthy in this country begin paying their fair share. For decades, the extremely powerful have manipulated our tax laws to ensure that they now end up with the lowest effective tax rate of any group. Raising the top income tax bracket is not sufficient, since the largest fortunes are not created through income. The only real path forward is through a wealth tax such as this one. Constituents in Maryland's 5th District know that the ultra wealthy are exploiting our tax system while millions of working-class families struggle to get by. I'm calling directly on Majority Leader Hoyer to support the Ultra-Millionaire Tax Act, on behalf of his constituents and working-class families across the country."

Colin said he would support the proposal if he were in Congress, but would go even further. "I think it’s a great revenue raising proposal. The revenue that this would bring in would help the federal government do things like address the pandemic, address racial and economic inequality, support workers and the creation of federal jobs, promote tax fairness, combat climate change, and force Wall Street to contribute more to Main Street. Granted, the proposal is technically a 'tax increase,' which itself may be the ultimate sin in the eyes of many Republican politicians and conservative Democrat politicians, but the proposed tax increase would be on 0.05% of Americans and is supported by a majority of Americans, including even a majority of Republicans. So, again, I would support the bill, but I actually would also try to amend it so that it included a few more people. Why stop at 50 million rather than 40 million or 30 million or 20 million or even 15 million? I have an open mind about where the line should be drawn, but I can’t offhand think of a compelling reason to exempt people with net worths of over 15 million from such a wealth tax. On the other hand, I can think of multiple reasons that the federal government needs even more revenue than would be generated by only increasing taxes on those with net worths of over 50 million dollars. As we discuss taxes, we need to keep in mind what the revenue could be used for, including things like Medicare for all, a Green New Deal, and Universal Basic Income."

A senior Democrat in the House said he would like to study the proposal more carefully before commenting publicly but told me he finds the proposal interesting and he seems to see it very much the way Colin does, having, he said, "long believed that we should shift the burden of our tax code from income (work) to wealth (assets), so directionally this is intriguing. I’m not sure why the burden only kicks in at $50 million. Would probably make sense to either smooth the burden or reduce the overall rate by bringing in people with fortunes of, say $10 million. I think the answer is that this is obviously about going after the richest of the rich, which I get, as a marketing matter. The one hard thing, which I’ve never really been able to get a good answer to is how you value assets on an ongoing basis. Land, artwork, antique cars, patents, etc, are hard to value. And of course, the truly rich will flee assets that have clear valuations into these illiquid assets to create as much ambiguity as possible. If we could answer that, I’d love to see the burden shift from income to assets. There are plenty of people with relatively high incomes who aren’t really super rich. Another way to do this, of course, which would be administratively a lot easier, would be to get serious about a real inheritance tax."