Democrat 2020 contender Bernie Sanders has unveiled an ambitious wealth tax proposal, promising to slash the fortunes of America’s uber-rich. Is his plan an existential threat to the wealthy or mere election bluster?
The Vermont senator unveiled his plan on Tuesday, declaring on Twitter afterwards that “billionaires should not exist.” If implemented, his ‘Tax on Extreme Wealth’ would see a progressive tax applied to couples with a net worth of $32 million, or singles with a worth of at least $16 million. These groups would give the government a one-percent cut of their fortune annually, while those with assets of $10 billion or more would face an 8 percent tax bill.
All in all, the proposal would see the fortunes of the wealthiest Americans halved over 15 years, and would generate $4.35 trillion over a decade, according to Sanders’ campaign website.
Though Sanders has advocated for such a tax for several decades, the latest announcement is widely seen as a response to 2020 frontrunner Elizabeth Warren’s own ‘Ultra-Millionaire Tax’ plan, revealed earlier this month as the Massachusetts senator surged in the polls. Warren’s plan is less harsh, beginning at $50 million and levying a three-percent annual tax on fortunes above $1 billion.
With both candidates vying for the same supporters, the idea of a wealth tax is a popular one with voters. According to a Morning Consult poll taken in February, when Warren first mooted her version of it, 74 percent of Democrats and 61 percent of all voters backed the idea. Furthermore, a CNBC survey taken in June found that 60 percent of millionaires supported Warren’s plan.
The road from campaign promise to policy is a long and difficult one, however. Should Sanders or Warren win, their proposals will still need to pass Congress. Even if Democrats keep the House and take over the Senate next year, Republican opposition will likely be fierce.
Such a plan would also be challenged in the courts as unconstitutional. Both Sanders and Warren’s campaign sites offer arguments from legal scholars that they say wave this away. Regardless, a lengthy legal battle would ensue, from the moment either plan would be signed into law.
Enforcement of the law brings with it more problems. To counter evasion, Sanders proposes creating a “national wealth registry,” and dramatically expanding the Internal Revenue Service to audit all billionaires every year. Those who try to move their assets offshore would be hit with an “exit tax” of up to 60 percent.
Sanders hopes to use the takings to fund his promised affordable housing and universal childcare programs, as well as to partially finance ‘Medicare for All,’ a program whose bill runs into the tens of trillions.
“Demanding that the wealthiest Americans pay their fair share isn’t radical,” Sanders’s campaign site says. Come 2020, America will find out whether a majority agrees with that.
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