Elizabeth Warren's wealth tax could cost the rich hundreds of billions
Under Democratic presidential candidate Elizabeth Warren’s plan to tax wealth in the U.S., some of the richest in the nation, including Jeff Bezos, Warren Buffett, Bill Gates and Mark Zuckerberg, could lose hundreds of billions of dollars in net worth over decades.
According to a paper written by two University of California, Berkeley economists, who helped to create Warren’s wealth tax plan, the top 15 richest Americans would have seen their collective net worth drop by almost half to $433.9 billion if Warren’s plan had been in place since 1982. Right now, the wealthiest people in America control an estimated $942.5 billion.
Under Warren’s plan, which she rolled out in January, there would be a 2 percent tax on individuals with a net worth above $50 million, and a 3 percent tax on those with more than $1 billion in assets. The Massachusetts Democrat’s campaign said the tax -- intended to combat rising income inequality -- would apply to less than 0.1 percent of the population, or roughly 75,000 families.
Critics have questioned the legality of a wealth tax in the U.S. (When Warren released her plan, she came prepared for accusations that it might be unconstitutional: She released two letters from groups of prominent legal academics saying her plan passed muster.)
Authored by renowned French economists Emmanuel Saez and Gabriel Zucman, the analysis, which did not take into account any measures the billionaires might take to shelter their wealth from taxes, including increased charitable giving, found that Amazon CEO Bezos’ pre-divorce fortune would plummet from $160 billion to $86.8 billion, while Microsoft founder Gates would see his fall from $97 billion to $36.4 billion.
Also included in the study were: Berkshire Hathaway Chair Buffett; Facebook founder Zuckerberg; Oracle founder Larry Ellison; Google founder Larry Page; Charles and David Koch (the latter of whom died over last month); Michael Bloomberg and the heirs to the Walmart fortune.
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There has never been a wealth tax in the U.S. In fact, tax law in the U.S. has become significantly less progressive in recent decades. All three traditional taxes -- the individual income tax, the corporate income tax and the estate tax -- have weakened. For instance, the top marginal federal income tax rate has fallen dramatically, from more than 70 percent between 1936 and 1980 to 39 percent in 2019.
“As a result, when combining all taxes at all levels of government, the U.S. tax system now resembles a giant flat tax,” the economists wrote. “All groups of the population pay rates close to the macroeconomic tax rate of 28 percent, with a mild progressivity up to the top 0.1 percent and a significant drop at the top-end, with effective tax rates of 23 percent for the top 400 Americans.”
The economists’ study comes ahead of the third presidential Democratic debate, slated to take place Thursday night, when the divide between progressive and moderate candidates is expected to dominate the stage.