Elizabeth Warren unveiled her new legislation on Monday called the “Ultra-Millionaire Tax Act”. It is released in collaboration with Congresswoman Pramila Jayapal of Washington and Congressman Brendan Boyle of Pennsylvania.
With this legislation, the lawmakers propose a 2% annual tax on households and trusts between $50 million and $1 billion. It will also suggest a 1% annual surtax on households and trusts over $1 billion.
How will the wealth tax change things ?
Elizabeth Warren has called for a wealth tax for a long time. And it was a big part of her presidential campaign.
“This is a wealth tax that has been needed for a long time. We need it to produce more revenue, to create more opportunity in American,” Warren said. “But it is a wealth tax that we particularly need because of the changes in this country under the pandemic. We have watched the wealth of the billionaire class in America increase by more than a trillion dollars over the last year.”
Recent research shows that the coronavirus pandemic has broadened the wealth gap. It has decreased the income of already poor citizens and increased that of the already rich, thus the Senator believes that now is the perfect time for such a law to be put in motion.
According to analysis from the University of California-Berkley, about 100,000 American families will be taxed under this new legislation. Economists also believe that it will generate a revenue of $3 trillion dollars over 10 years. And it is projected that this will happen by affecting only 0.05% of the U.S population.
Will this proposal become law ?
However, President Joe Biden and his administration seem to not be in favor of the wealth tax. During his presidential campaign, Biden was opposed to such legislation and indicated that his team will think of alternate ways to generate money for the federal government.
At the same time, it is unlikely that such a bill will pass the Senate, as it cannot gather super-majority. This has caused for many Democrats – including Warren and Bernie Sanders to call for the removal of the “filibuster rule”.
Nevertheless, the Massachusets Senator and her co-sponsors believe that their proposal should be a high-priority one. They see it as the best way for the United States to be able to get out of the economic crisis that the pandemic has caused and to increase governmental funds that can go to social programs like child care, education, and healthcare.
Reactions from economists and the general public
Many economists don’t believe that the wealth tax is a mechanism that will work for the betterment of the economy. Research shows that the countries that do have such legislation are very few and that the number is going down. For example, during the 90s in Europe, more than 10 countries had wealth taxes and in 2018 that number had dropped down to 3.Another concern of the specialists is that such a tax can have negative trickle-down effects on economic growth as it can slow down much-needed investments.
Nonetheless, it seems like large portions of the nation are in-favor of a wealth tax. According to a Reuters/Ipsos poll that was conducted last year, nearly two-thirds of U.S citizens support the idea that the very rich should be taxed more.