Topline: Senator Bernie Sanders, not looking to be outdone by progressive rival Elizabeth Warren, just released his own plan for a wealth tax on the richest Americans—one that’s far more aggressive than any yet proposed by Democratic presidential candidates.
- The Vermont senator unveiled his proposal on Tuesday morning, saying it would raise an estimated $4.35 trillion over the next decade, Axios first reported.
- Sanders’ plan embraces an idea that has been a signature campaign promise of his top progressive rival, Senator Elizabeth Warren. Her proposal applies a 2% tax on every dollar earned over $50 million, and a 3% tax on assets above $1 billion.
- While Warren’s plan came first, Sanders’ proposal goes even further, much to the unease of the millionaires and billionaires. His wealth tax would include the same 2% tax on every dollar over $50 million, but it would also institute a lower tax bracket: a 1% tax on every dollar earned over $32 million.
- Sanders’ plan would rely on a progressive tax structure for higher tax brackets: 3% from $250 to $500 million, 4% from $500 million to $1 billion, 5% from $1 to $2.5 billion, 6% from $2.5 to $5 billion, 7% from $5 to $10 billion, and 8% on wealth over $10 billion.
- The funds raised from taxing the ultra-rich would be used to subsidize Sanders’ affordable housing, universal child care and Medicare for All plans, all of which require large amounts of government spending.
- Sanders’ plan is projected to raise $1.75 trillion more than Warren’s plan over the same time period, according to estimates from University of California, Berkely economists Emmanuel Saez and Gabriel Zucman. The two also estimate that Sanders’ wealth tax would cut the wealth of billionaires in half after 15 years.
Crucial quote: “I don’t think that billionaires should exist,” Sanders said in an interview with The New York Times. “This proposal does not eliminate billionaires, but it eliminates a lot of the wealth that billionaires have, and I think that’s exactly what we should be doing.”
Surprising fact: Amazon founder Jeff Bezos’ net worth, which was $160 billion last year according to Forbes, would fall to $87 billion under Warren’s tax and $43 billion under Sanders’ tax, The New York Times calculated. Overall, Saez and Zucman estimated that the $943 billion cumulative wealth of the 15 richest Americans last year would be reduced to $434 billion under the Warren plan and $196 billion under the Sanders plan.
What to watch for: With the release of his plan, Sanders is likely trying to remind voters that he is the true 2020 progressive candidate, setting up a possible showdown with Warren (although the two have so far refused to criticize each other). Sanders’ proposal could send a signal to Democrats that he’s willing to take progressive policy further, as his tax plan would apply to a larger number of households and raise more money.
Tangent: It’s important to remember that a wealth tax does not directly apply to income, but rather to what people already own, such as stocks or land.