On Monday, March 1, Senator Elizabeth Warren, Rep. Pramila Jayapal, and Rep. Brendan Boyle took a stand against out-of-control wealth inequality by introducing The ‘Ultra-Millionaire Tax Act’ to Congress.
So what will this tax do? It’s a virtual copy of the wealth tax that Warren ran on in her 2020 presidential campaign. A wealth tax is a yearly tax on the net worth, essentially assets minus debts, of extremely wealthy individuals.
The Ultra-Millionaire Tax Act would tax a person’s net worth between $50 million and $1 billion at 2% annually. For those with more than $1 billion in wealth, it would tax anything above $1 billion at 3% annually.
While lawmakers talk a lot about different ways to tax different types of income, they’re really dancing around the fact that economic inequality goes far beyond income inequality. Wealth inequality is much, much worse, and this bill goes straight to the heart of that issue. The top 1% control about 40% of the wealth in America and the top 0.1% own about the same wealth as a shocking 90% of America.
There is a big difference between income and wealth. Income is awarded to working citizens; meaning that if they don’t work, they don’t get paid. Really rich people, on the other hand, live very differently. The ultra-rich often gets their money from generational wealth, money passed down between family members. As the ultra-wealthy live comfortably off of the return on their investments without even working, their wealth continues to grow.
With the way our economy is structured, it is virtually impossible for the ultra-rich to do anything but continue to get richer, growing inequality almost inevitably. A wealth tax would directly address that huge problem. There is absolutely no way that billionaires should not have to pay their fair share in taxes while nurses, bus drivers, childcare workers, utility workers, etc. pay their fair share.
This is a deeply-rooted systemic issue that has much broader implications for our society. The racial wealth gap is in large part the result of excessive wealth held by a very small, very white minority of millionaires and billionaires. This has left the average White family in the U.S. with an average net worth of $171,000; an astonishing ten times higher than the $17,150 net worth of an average Black family in the U.S.
There is no better time than now for a wealth tax. The global COVID-19 pandemic has been disastrous for low-wage workers and working-class Americans; essential workers forced to deal with a lack of workers protections, being laid off, having hours cut, having to pay their rents late, etc, Meanwhile, billionaires have seen a rapid increase in their wealth, adding $1.3 trillion to their collective net worthwhile the rest of the world struggled to stay above water. A comprehensive wealth tax, like the one proposed by Senator Warren and Representatives Jayapal and Boyle, would go a long way towards shrinking this gap.
Implementing a wealth tax will help close the widening gap between rich and poor, raise trillions of dollars to reconstruct our communities by increasing funding for our education systems, and create jobs that provide living wages to their workers (although it’s important to point out, as always, that the government doesn’t need to raise money through taxes to pay for things – we can just print the money. But unfortunately the political reality we live in often calls for programs to be “paid for”). The wealth tax will directly shrink the long-term growth of economic inequality, making the Ultra-Millionaire Tax Act exactly what this country needs to catapult it into economic recovery.