Following their analysis of Bernie Sanders’ new tax plan, University of California, Berkeley professors Emmanuel Saez and Gabriel Zucman concluded that billionaires could face a new effective tax rate of 97.5%.
This figure dwarfs the estimated 62% effective tax rate billionaires would face under Elizabeth Warren’s plan or the 30.6% rate under Joe Biden’s. Currently, this group pays 23%.
(Note (Bloomberg): The calculations by Saez and Zucman cover state, local and federal taxes and also treat health insurance premiums that individuals pay as a tax, arguing that they are one of main drivers of inequality in the U.S.)
Determined to reduce income inequality and “spread the wealth around,” both Sanders’ and Warren’s plans include a wealth tax. Warren’s plan would “place a 2% levy on fortunes over $50 million and a 3% levy on assets over $1 billion. Sanders’ plan goes further, and starts taxing wealth of $32 million at 1%, increasing to an 8% tax on fortunes above $10 billion.”
In an email to Bloomberg, Professor Saez wrote, “With the wealth tax, you get directly at the stock instead of hitting the flow of income, making it a much more powerful de-concentration tool than income taxes.”
Professors Saez and Zucman support large tax increases for the wealthy. They have written a new book in which they argue for higher taxes. The book, entitled “The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay,” is scheduled to be released on Tuesday. They have set up an interactive website which allows “users to select different tax rates to see how levies on various income groups are increasing.”
Back on the campaign trail following a recent heart attack, Sanders told supporters that his plan would likely cut the number of billionaires in the U.S. in half within 15 years and would generate approximately $4 trillion in additional tax revenue over the next ten years.
Raising taxes on the rich has traditionally been very popular with voters, the majority of whom believe that the wealthy don’t pay enough. The 2020 Democratic presidential candidates have exploited this. They’re trying to outdo each other in terms of how far they’ll go to stick it to the rich. In addition to raising income taxes and adding a wealth tax, some of their plans include a tax on stock and bond trades.
Since the number of billionaires in the U.S. is currently around 600, Democrats will need a lot more revenue than this to pay for all of the new social programs they’ve proposed. And that means they’ll be looking down the economic food chain to make up the difference. Don’t forget that Obama considered a couple earning over $250,000 to be rich. Try telling a New York City cop and his wife who’s a nurse that they’re rich and need to pay their fair share.