Bernie Sanders Introduces Dramatic Plan to Tax the Rich
Proposals for taxing wealthy Americans are gaining traction among Democrats in Congress leading up to the 2020 election. First, New York Rep. Alexandria Ocasio-Cortez suggested in a “60 Minutes” interview that a 70 percent marginal tax rate for income earned above $10 million could help pay for the Green New Deal, a set of environmental policies designed to offset the effects of climate change. Then, Massachusetts Sen. Elizabeth Warren, who recently announced her run for the presidency, proposed a 2 percent tax on Americans whose net worth is above $50 million, with, as CNN explains, “an additional 1 percent levy on billionaires.”
On Thursday, Vermont Sen. Bernie Sanders joined the chorus, with a bill that would, according to The Washington Post’s Jeff Stein, “dramatically expand the federal estate tax on the wealthy, including a new 77 percent rate on billionaires’ estates.”
Called the For the 99.8% Act, Sanders’ plan aims to tax only the estates of Americans who inherit over $3.5 million, just 0.2 percent of the population. Everyone else “would not see their taxes go up by one penny under this plan,” aides to Sanders told Stein.
This is not the first time that Americans with estates over $1 billion were taxed at 77 percent. MarketWatch points out that the figure “is a return to the top rate from 1941 to 1976.” MarketWatch adds that for those who are millionaires but not billionaires, “The tax would kick [in] at a 45% rate on estates valued at as little as $3.5 million.”
According to Sanders’ staff, Stein reports, “[T]he plan would raise $2.2 trillion from 588 billionaires, but over an unknown period of time because it would only take effect once they die. … Over the next decade, the tax would raise $315 billion.”
Warren says her plan, which she calls an “ultra millionaire tax,” would raise $2.75 trillion over the next decade. That figure, Natasha Korecki reports in Politico, was the conclusion of University of California at Berkeley economists Emmanuel Saez and Gabriel Zucman, who wrote in a letter obtained by Politico:
We estimate that about 75,000 American households (less than 0.1%) would be liable for the wealth tax and that the tax would raise around $2.75 trillion over the ten-year budget window 2019-2028, of which $0.3 trillion would come from the billionaire 1% surtax.
Saez and Zucman, who also wrote a New York Times op-ed in support of Ocasio-Cortez’s proposal, have been advising Warren’s campaign.
Sanders, Stein reports, supports both Warren and Ocasio-Cortez’s plans, adding that in 2017, Sanders “pitched a wealth tax on those with assets over $21 million as part of a suite of financing options for his ‘Medicare-for-all’ health-care plan,” in addition to supporting a surcharge on estates worth over $1 billion, and a top marginal tax rate of at least 60 percent as a presidential candidate in 2016.
Sanders and Warren’s proposals face fierce opposition from Senate Republicans. Earlier this week, Senate Majority Leader Mitch McConnell of Kentucky, Sen. Charles Grassley of Iowa and Sen. John Thune of South Dakota introduced a plan to repeal the estate tax.
The estate tax was already weakened by a 2017 law that applies it only to couples passing on estates of over $22 million. Thune argues in a press release that the estate tax “threatens families’ agricultural legacies and makes it difficult and costly to pass these businesses down to future generations.”
Sanders shot back at Republicans while introducing his bill, saying, “It is literally beyond belief that the Republican leadership wants to provide hundreds of billions of dollars in tax breaks to the top 0.2 percent of our population. … This is not only insane, it tells us the degree to which the billionaire class controls the Republican Party.”
Public opinion may be catching up with Sanders, Warren and Ocasio-Cortez. As longtime Democratic pollster Celinda Lake told Stein, “A lot of the conventional wisdom says, ‘Stay away from tax increases,’ but it’s actually quite popular. … Even in the last six months, you’re seeing a shift.”