2020 Contenders Embrace the Wealth Tax

As the 2020 primaries heat up and candidates search for a way to distinguish themselves in such a large field, one issue has transformed into a key debate of the campaign: how to tax the rich to ensure a more equitable, prosperous society.

Many of the candidates have bold tax plans, from Senator Sanders’s bill to expand the estate tax to Senator Booker’s baby bonds proposal, but Senator Elizabeth Warren is the one driving this conversation with a fully fleshed-out plan for a wealth tax. Her wealth tax is the boldest proposal to tax the wealthy so far, and despite concerns about its effectiveness, the idea is gaining steam. It’s no surprise – backed by the recent explosion of interest in the topic in the public imagination, “tax the rich” is on its way to becoming the Democratic cause célèbre – and we should all be excited about that.

But for those of us who try to limit our interaction with tax policy to submitting our annual forms to the IRS, a wealth tax may sound nice without connoting a specific meaning. Surely, getting the ultra-wealthy to pay their fair share is a good thing, but how would it make the everyday lives of average Americans better?

The answer is that a wealth tax is actually one of the best opportunities to curb the rapidly growing concentration of wealth in just a few American families, and end the disproportionate amount of power and influence over our politics they wield because of it.

It’s up to the candidates to convince you on which of their specific policies are the best, but that kind of potential for large-scale change is why the premise of a wealth tax is a good thing. And it’s also why the rising debate over it should be welcomed as a golden opportunity to make this the defining issue of 2020.

Some of the pushback on this idea comes from Republican spin doctors, who yell on cable news that this is just another unfair tax rise that punishes success. The proposed wealth tax, however, only applies to the top 0.01 percent, which is an astonishingly low number of Americans.

Senator  Warren’s wealth tax applies to just 75,000 households. Her wealth tax would enact a 2 percent levy on assets in excess of $50 million, and a 3 percent tax on billionaires. Such low percentages don’t sound like they could make a huge difference, it’s a testament to the mind-boggling wealth of this small group that those taxes would bring in an estimated $2.75 trillion over a decade.

In case you think it sounds unfair to have a tax on just 75,000 people: these households collectively own more wealth than the bottom 90 percent of incomes combined. Further, over 60 percent of American wealth is inherited and not earned, but the problem is even worse among the ultra rich. Just 15 of the wealthiest families in America, including the Mars, Walton, and Koch families, own a collective $618 billion in inherited wealth.  Taxes have never been paid on most of that wealth: not by the people who earned it (thanks to our absurd capital gains rules) and not by those who inherited it (thanks to the stepped up basis rules). This is hardly punishing success – it’s just a small step towards fairness.

With Warren’s wealth tax generating headlines and encouraging new Presidential candidates like former Representative Beto O’Rourke to come out in favor of the idea, it’s likely that a whole range of proposals for taxing the rich are just on the horizon. This is an important debate that this country needs to have, and we’re eager to see candidates, and the public, rally behind the idea that tackling our country’s massive wealth inequality, whether it’s through a wealth tax or some other progressive tax on the rich, is not just a good idea, but a necessity.

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