There’s an increasingly vibrant debate on the left about how to mitigate rising wealth equality in America—a debate that Alexandria Ocasio-Cortez brought to the forefront with her proposal for a 70% income tax rate on earnings above $10 million—and according to the Washington Post, Elizabeth Warren is about to throw her hat into the ring with a general “wealth tax”:
Emmanuel Saez and Gabriel Zucman, two left-leaning economists at the University of California, Berkeley, have been advising Warren on a proposal to levy a 2 percent wealth tax on Americans with assets above $50 million, as well as a 3 percent wealth tax on those who have more than $1 billion, according to Saez.
The wealth tax would raise $2.75 trillion over a ten-year period from about 75,000 families, or less than 0.1 percent of U.S. households, Saez said.
In order to probably assess and subsequently tax the wealth in question, Warren’s plan includes increased IRS funding, mandatory audits, and a $50 million penalty for anyone wishing to renounce U.S. citizenship to escape the tax.
Those are important complementary measures, as part of the problem with the existing tax code is the plethora of loopholes the very wealthy use to escape tax payments even at the current low rates. If implemented, a tax like this could go some way to redressing the growth of inequality in America, which per the economists cited in the WaPo article, has seen a rise in the wealth share of the top one percent from 22 percent to 40 percent since the 1970s. As WaPo’s Jeff Stein notes, this tax rate is higher than the typical European equivalent, even as their highest level income tax rates exceed ours:
It remains to be seen what Warren’s income tax plan will look like—whether she agrees with AOC’s 70% plan, or if she has something more conservative in store.