Bay State Sen. Elizabeth Warren is making good on her campaign promise of an “ultra-millionaire tax” — a proposal opponents call “unenforceable.”
“This is wealth tax that has been needed for a long time,” Warren said during a Monday press conference. “We need it to produce more revenue to create more opportunity in America, but it is a wealth tax that we particularly need because of the changes in this country under the pandemic.”
Warren said her bill would “level the playing field” as the rich have only gotten richer as many Americans suffer in the current economy.
Warren’s proposal would levy a 2% annual tax on the net worth of households and trusts between $50 million and $1 billion. It would also add a 1% annual surtax on assets over $1 billion, or a 3% tax overall for billionaires.
The legislation “ensures that the wealthiest begin to pay their fair share,” said U.S. Rep. Pramila Jayapal, D-Wash., who is filing the bill alongside Warren and U.S. Rep. Brendan Boyle, D-Pa.
Warren’s “ultra-millionaire tax” was a centerpiece of her presidential bid and a popular policy proposal among her supporters while on the campaign trail.
About 100,000 American families would be subject to the tax that would raise roughly $3 trillion over the next decade, according to estimates provided by lawmakers — higher estimates than what Warren espoused on the campaign trail.
Beacon Hill Institute president and government watchdog David Tuerck said wealth taxes are a “notoriously impossible tax to administer.”
“They are extremely hard to enforce. This proposal is not tied to the tax code, it taxes wealth,” Tuerck said.
Tuerck described the tax as an “accounting nightmare” in which the wealthy would be forced to account for every asset they have — “which involves of course lots and lots of estimation.”
The appetite for taxing the rich has gained traction in Democratic strongholds in recent years. Warren’s proposal goes a step beyond what President Biden floated on the campaign trail. But the moderate Democrat has proposed his own version of a wealth tax including raising taxes on households earning more than $400,000, hiking the corporate tax rate and making changes to the capital gains tax, among others.
In Massachusetts, lawmakers have floated a proposal that would nearly double taxes on unearned income like long-term capital gains, dividends and interest by hiking the rate from 5% to 9%.
A so-called “millionaire tax” is likely to land on the 2022 statewide ballot. The constitutional amendment aims to impose a 4% surtax on income above $1 million from a flat 5% rate up to 9%. Lawmakers estimate it could generate an additional $2 billion in annual revenues.
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