Jeff Bezos would pay more than $ 5 billion a year with Warren’s wealth tax

Jeff Bezos is expected to pay $ 5.7 billion in taxes by 2020 under the Ultra-Millionaire Tax Act proposed Monday by a group of Senate and House Democrats.

Senator Elizabeth Warren, D-Mass .; Senator Bernie Sanders, I-Vt., And others presented their wealth tax proposal Monday, saying it would increase much-needed billions of revenue and help reduce the wealth gap that has only been expanded. during the pandemic. The tax would mean an annual tax of 2% on wealth in excess of $ 50 million and 3% on wealth in excess of $ 1 billion.

Warren said the tax would only affect the 100,000 richest (or 0.05% higher) American families and raise about $ 3 trillion in ten years. He said the additional revenue will be used to help pay for childcare, educational infrastructure and clean energy. This is essentially the same tax that Warren advocated during his campaign, when the slogan “two cents” became a popular cry in his rallies among those who supported the tax. Warren often argues that since the wealth tax rate is 2%, “it’s only two cents for every dollar after $ 50 million.”

Warren said the tax is even more urgent during the Covid crisis as it has exposed and accelerated the U.S. wealth gap.

“We understand the direction we’ve taken. This pandemic has created more billionaires. People at the top are barely hanging on their nails,” Warren told CNBC’s “Squawk Box.”

Critics say the tax may not be constitutional and the rich could easily gamble. Most European countries have abandoned wealth taxes as they earned less income than expected and were easily shunned by millionaires and billionaires.

“The lesson from other countries’ experiences on wealth taxes should serve as a warning that the U.S. should avoid adopting one, ”said Erica York of the Conservative-leaning Tax Foundation. “A wealth tax would be plagued by many administrative and compliance issues, as well as evasion and avoidance issues. It would be a huge administrative challenge to implement and it is not clear, even with more resources, that the IRS would be able to collect wealth tax efficiently “.

To combat evasion, the Ultra-Millionaire tax would provide $ 100 billion to the Internal Revenue Service for further execution. It would also include a minimum audit rate of 30% for households with $ 50 million or more in assets, as well as new technological tools to help the IRS value hard-to-value assets, such as art or real estate. For those looking to move to another country and give up their citizenship to avoid the tax, the proposal also includes a 40% “exit tax” for those trying to leave.

“The implementation part is a lot easier than it sounds,” Warren said. “We learned from some of the mistakes they made in Europe. This version of the wealth tax covers all your property. It doesn’t matter if it is kept in stock, on real estate or on racehorses. Everything is covered, from so it doesn’t make sense to move property. Also, wherever you have it, it’s covered, whether you have it here in the US or in the Cayman Islands. “

About half of the tax revenue would come from billionaires, who according to Warren had added more than $ 1 trillion to their wealth during the pandemic. According to calculations by the Institute of Political Studies, Jeff Bezos, the richest person in the world, should pay $ 5.7 billion by 2020 with the Ultra-Millionaire tax. According to the analysis, he would still be left with a net worth of more than $ 185 billion after tax.

Elon Musk would owe $ 4.6 billion by 2020 and still have a fortune of more than $ 148 billion by the end of the year. Bill Gates would have to pay $ 3.6 billion by 2020 and Mark Zuckerberg would have to pay $ 3 billion.

“The wealth tax for billionaires alone would fund nearly three-quarters of President Biden’s $ 1.9 trillion pandemic bailout package, which is currently pending in the Senate,” said Chuck Collins, director of the Program on inequality of the Institute of Political Studies.