Senator Elizabeth Warren, D-Mass., Holds a press conference to announce legislation that would tax the net worth of America’s richest people at the U.S. Capitol on March 1, 2021 in Washington.
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A large number of Democrats on Capitol Hill, including Progressive Senators Elizabeth Warren, D-Mass., And Senator Bernie Sanders, I-Vt. – On Wednesday it proposed a total annual tax of 3% on wealth in excess of $ 1 billion.
They also demanded an annual tax of less than 2% on the net worth of households and trusts ranging from $ 50 to $ 1 billion.
The Ultra-Millionaire Act aims to curb a growing U.S. wealth gap, which has been exacerbated by the Covid pandemic.
“The ultra-rich and the powerful have plotted the rules in their favor so much that the top 0.1% pay an effective tax rate below 99% lower and the multimillion-dollar wealth is 40% higher than before the crisis Covid, “Warren said Wednesday in a statement.
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About 100,000 Americans (or less than 1 in 1,000 families) would be subject to a wealth tax by 2023, according to Emmanuel Saez and Gabriel Zucman, economists at the University of California, Berkeley.
The policy would raise at least $ 3 trillion in a decade, they found.
Warren called for tax revenues to be invested in child care and early childhood education, early childhood education and infrastructure.
Aside from Warren and Sanders, there are other sponsors of the legislation: Sens. Sheldon Whitehouse, DR.I .; Jeff Merkley, D-Ore .; Kirsten Gillibrand, DN.Y .; Brian Schatz, D-Hawaii; Edward Markey, D-Mass .; and Mazie Hirono, D-Hawaii. Representatives of Pramila Jayapal, D-Wash .; and Brendan Boyle, D-Pa., are also sponsors.
The bill is likely to face major hurdles in the Senate, where Democrats have the thinnest majority.
Some groups also predict that a wealth tax will have some negative effects.
A 2020 Tax Foundation analysis of separate Warren and Sanders wealth tax proposals during their presidential elections showed that they would reduce U.S. economic output by 0.37% and 0.43%, respectively. long-term.
A wealth tax would also face administrative and compliance challenges, such as difficulties in assessing assets and possible tax evasion schemes, according to the Tax Foundation.
The Ultra-Millionaire Tax Act would try to solve some of these problems.
The legislation would invest $ 100 billion in IRS systems and personnel, guarantee a 30% audit fee for the super-rich, and impose a 40% exit tax on wealthy Americans trying to give up their citizenship to avoid a wealth tax.