Should Billionaires Be Taxed Out Of Existence? Are You Willing To Vote For Candidates Who Agree?

Democracy Doesn't Function With Billionaires

Several of the committees I serve on interviews candidates. And one is exclusively focused on fiscal issues, primarily taxation. Other committees are more broadly based, as is the candidate vetting I do for Blue America. But I really enjoy the committee interviews, not just because of how tightly focused they are but also because I get the opportunity to hear what Blue Dogs and New Dems have to say, since we never consider them at Blue America and I speak with them almost as rarely as I do with Republicans.

Most of the candidates we talk to about taxes agree that taxes must rise on the very wealthy. Usually the more conservative the candidate is the less they want to discuss it, usually claiming the nature of their districts is the problem. None, other than the progressive reformers, have ever agreed to a formula that determines— or even suggests— rates. The conservative or “moderate” Democrats agree the rich need to pay more taxes but… not by much. Sometimes it’s very frustrating trying to get them to talk about it. One told us that he can’t discuss it with voters but that once he’s elected, he’ll support very high rates for the super-rich. That ws about as good as we heard this month. Post-primary season, no one is willing to go out and campaign on raising taxes for the rich, even though a wide majority of voters want exactly that.

Yesterday, Fortune ran a report by Eleanor Pringle about Bernie, who like myself, says billionaires should be taxed out of existence, and a relatively reasonable billionaire, Bill Gates, who, according the Forbes, is worth 136.6 billion and is the 7th wealthiest person in the world. Like the candidates we’ve been interviewing, they both agree the super-rich should pay “more.” How much more? That’s where it gets tricky.

Bernie’s proposal seem extremely modest… and there’s not much taxing billionaires out of existence as far as I can tell. At best, it seems like a decent step in the right direction. Bernie and Gates were both eager to sit down and talk. “Gates,” wrote Pringle, “approached Sen. Sanders to film an episode for his new Netflix show What’s Next? The Future with Bill Gates, which aired this week. Writing on his blog, GatesNotes, on Wednesday, the tech tycoon said when he emailed Sen. Sanders to request an interview about income inequality, he didn’t expect to hear back very promptly.”

In 2019 Bernie tweeted a tax on extreme wealth plan. It only applies to the top 0.1% of households— people with a net worth of over $32 million. Over 15 years, the plan would cut the net worth of billionaires in half to “substantially break up the concentration of wealth and power of this small privileged class. It would start with a 1 percent tax on net worth above $32 million for a married couple. That means a married couple with $32.5 million would pay a wealth tax of just $5,000. The tax rate would increase to 2 percent on net worth from $50 to $250 million, 3 percent from $250 to $500 million, 4 percent from $500 million to $1 billion, 5 percent from $1 to $2.5 billion, 6 percent from $2.5 to $5 billion, 7 percent from $5 to $10 billion, and 8 percent on wealth over $10 billion. These brackets are halved for singles.”

Back to Pringle’s report. She noted that “Sanders described the income disparity in the U.S. between the working class and billionaires as a ‘moral and economic outrage,’ adding: ‘We cannot afford to continue this level of income and wealth inequality and we cannot afford a billionaire class.’ Gates wrote that this stance prompted his friends to ‘raise an eyebrow’ when they heard about the pair’s meeting. ‘This wasn’t my first time meeting the Senator,’ Gates revealed this week. ‘In the past, I found him quite approachable. I knew that, on lots of issues, we see things the same way. We had talked briefly about the climate crisis, but we had never had a lengthy conversation— and certainly not about income inequality.’ This was exactly the topic of discussion.

Gates wrote that Bernie asked him “some hard questions about how much wealth I thought would be enough. We agreed that wealthy people should be taxed more. Gates then asked to see Bernie’s legislation and afterwards wrote that “It was a great discussion,” although—more in line with my own thoughts, Bernie “has also proposed that the government should ban billionaires by confiscating any wealth above $1 billion.

In an interview with HBO Max’s Who’s Talking to Chris Wallace, last year Bernie said: “You may disagree with me, but I think people can make it on $999 million… I think that they can survive just fine.” Two billionaires, Warren Buffett and Jamie Dimon, have less confiscatory plans to raise taxes on the super-rich. Buffett wants Congress to pass a law so that “no household earning more than $1 million annually should pay a smaller share of its income than middle-class families,” something Dimon agrees with.

It moves in the direction of income tax rate relative fairness, not the kind of tax on wealth advocated by Bernie. Essentially, Buffett’s proposal suggests closing loopholes that allow the ultra-wealthy to pay lower effective tax rates than ordinary workers. This would likely raise taxes on high earners but would not dramatically reduce wealth in the way Sanders’ wealth tax would. Billionaires would continue to accumulate wealth (and political power), though they might pay a bit more in taxes on their income. However, it wouldn’t cut into their net worth much, the way Sanders' wealth tax would, which, afterall, seeks to address inequality by targeting accumulated wealth, which is often where billionaires store their value— stocks, real estate, etc— rather than just income. Buffett’s approach would not touch accumulated wealth. Sure, billionaires would pay more taxes on what they earn annually, but the plan wouldn’t shrink their massive wealth accumulated in assets, since billionaires typically accumulate most of their wealth through capital gains and asset appreciation, which aren't fully taxed under current systems. This means they wouldn’t face nearly the same reduction in wealth as under Bernie’s wealth tax. Buffett’s proposal would ensure they pay a fairer share on their income but would not significantly reduce their fortunes.