Elizabeth Warren plans to propose a "wealth tax" on individuals with more than $50 million
Sen. Elizabeth Warren plans to propose a "wealth tax" on Americans with more than $50 million in an effort to combat inequality in the United States, according to an academic adviser behind the tax. If implemented, the tax would raise $2.75 trillion over a 10-year period, according to a study he conducted.
The proposal would levy a 2 percent tax on individuals with more than $50 million in assets and 3 percent on those with more than $1 billion, according to Emmanuel Saez, an economist from the University of California Berkeley who did research on "progressive wealth taxation" for Warren. The intent of the tax is to "narrow the gap between wealth growth at the top and wealth growth for the middle class," Saez wrote in an email Thursday to CBS News.
"Democracies become oligarchies when wealth is too concentrated," Saez wrote. "A progressive wealth tax is the most direct policy tool to curb the growing concentration of wealth in the United States."
But economists say that taxing assets as opposed to income would be an administrative challenge. High net-worth individuals tend to have their wealth tied up in difficult to value assets, like real estate and private companies, which would make it hard for government officials to determine what individuals owed, said Nicole Kaeding, the Director of Federal and Special Projects at the Tax Foundation, in a telephone interview with CBS News. On top of that, the types of people who would be subject to the tax would be the ones best positioned to avoid it, Kaeding said.
"Individuals with that kind of net worth obviously would have the ability and the capacity to hire high-prices attorneys and accountants to help avoid paying a tax like that," Kaeding said.
Only four industrialized countries — France, Norway, Spain and Switzerland — currently levy a "wealth tax" on their citizens, according to Kaeding.
Saloni Sharma, a spokesperson for Warren, did not immediately respond to emails requesting comment.
Approximately 75,000 households, less than 0.1 percent of the country's population, would be impacted by the potential tax, according to the study by Saez and Gabriel Zucman, another Berkeley economist, that the pair sent to Warren on Jan. 18.
"Combining progressive wealth taxation with policies to rebuild middle class wealth is exactly what the United States needs to ensure vibrant and equitable growth for the future," Saez wrote in an email.
Earlier this month, freshman Rep. Alexandria Ocasio-Cortez suggested a top tax rate of up to 70 percent for wealthy Americans during an interview on "60 Minutes."
Warren's proposal was first reported by the Washington Post.