Elizabeth Warren to propose new ‘wealth tax’ as 2020 race heats up
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Sen. Elizabeth Warren, D-Mass., is planning to propose a “wealth tax” on some of the richest Americans, an economist who advises her told CNBC on Thursday.
The Washington Post first reported the development.
“We helped her with the numbers,” economist Emmanuel Saez told CNBC. He said he believed the proposal would be officially announced on Friday.
He said his understanding was that the Warren team had already spoken with the Post at the time he told them the details of the report.
“The announcement will be made tomorrow I think, and I was confused because when I talked to the person I thought that Warren’s team had already talked to the press,” he said. “I shouldn’t be talking, you know.”
The wealth tax is projected to apply to less than 0.1 percent of U.S. households, and would raise $2.75 trillion over 10 years, Saez said.
Warren’s idea comes alongside other Democratic lawmakers’ plans to raise taxes on the wealthiest Americans to pay for ambitious policy goals, such as a “green new deal” that aims to economic inequality and climate change.
The development has not gone unnoticed by affluent investors and executives, many of whom are meeting this week at the World Economic Forum in Davos, Switzerland.
“By the time we get to the presidential election, this is going to gain more momentum,” Scott Minerd, global chief investment officer for $265 billion Guggenheim Partners, told CNBC earlier this week.
He was referring specifically to freshman Rep. Alexandria Ocasio-Cortez’s proposal for a 70 percent marginal rate on income above $10 million.
Warren’s proposal, however, differs from Ocasio-Cortez’s in distinct ways.
The Post reported that Warren has been advised by two left-leaning economists on a deal that would levy a 2 percent wealth tax on Americans with $50 million-plus in assets. For Americans with assets above $1 billion, that tax rate would increase to 3 percent.
The newspaper, citing a person familiar with the plan, reported that Warren’s proposal would try to counter tax evasion by boosting funding for the Internal Revenue Service, and by levying a one-time tax penalty on people with more than $50 million who try to renounce their U.S. citizenship. It would also require that a certain number of people who pay the wealth tax be subject to annual audits, The Post reported.
Tax-the-rich policies are not a new phenomenon among political candidates. In fact, Trump himself proposed a similar measure in 1999 as he explored a presidential bid as a prospective Reform Party nominee.
Trump’s plan was to impose a one-time 14.25 percent tax on individuals and trusts worth more than $10 million, according to reports at the time.
On Tuesday, Saez and another of her economic advisors, Gabriel Zucman, published an article in The New York Times defending Ocasio-Cortez’s proposal.
“An extreme concentration of wealth means an extreme concentration of economic and political power. Although many policies can help address it, progressive income taxation is the fairest and most potent of them all,” they wrote.
When Warren announced her exploratory committee for a 2020 presidential bid, she couched the decision in the language of economic equity.
“Our government is supposed to work for all of us, but instead, it has become a tool for the wealthy and well-connected,” Warren said in an announcement video.
This is breaking news. Check back for updates.