Sen. Bernie Sanders (I-VT) and Rep. Ro Khanna (D- CA) have introduced a bicameral bill that would impose a five percent tax on billionaires' wealth.
On March 2, one of the Senate's leading progressives, Sen. Bernie Sanders (I-VT), introduced a new wealth tax bill that would collect, he said, $4.4 trillion from the nation's almost 1,000 billionaires. The bill would allocate the revenue raised to social purposes like subsidizing the cost of health care/insurance.
A companion bill was introduced in the House by progressive Rep. Ro Khanna (D-CA).
Many economists immediately questioned the bill's $4.4 trillion revenue estimate (which is not official), saying mechanisms available to the wealthy to avoid the tax would dramatically lower the amount of revenue it would raise, an interesting commentary on the structure of our tax system. One said the revenue raised from the bill could go as low as $1.2 trillion.
Tax-the-rich is a common theme among the Democratic party's liberal wing but a striking difference in this bill is that it would tax accumulated wealth as opposed to income. That approach—which is not new but is less common than the proposals to impose higher income taxes on the wealthy—raises Constitutional as well as political issues.
Prospects: There is virtually no chance that this bill will even move through the legislative process much less be enacted into law while the GOP controls Congress. Its chances for enactment are dim even if Democrats were to retake control of the House, Senate or both. But the bill is a political marker. A number of other Democratic Members and Senators are reportedly crafting their own proposals to reduce the tax burden on the working class and paying for it by taxing higher income taxpayers and corporations. The tax burden to be borne by higher income taxpayers (and that could well include taxpayers with far less than $1 billion in accumulated wealth and/or income) is shaping up to be a key issue in the upcoming November mid-term elections.
NAIFA Staff Contacts: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org