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‘There Should Be No Billionaires’: Here Is The Bernie Sanders ‘Extreme Wealth Tax’ Plan
Via Bernie Sanders
Today, the United States has more income and wealth inequality than almost any major country on Earth, and it is worse now than at any time since the 1920s.
At a time when millions of Americans are working two or three jobs to feed their families, the three wealthiest people in this country own more wealth than the bottom half of the American people.
Over the last 30 years, the top 1 percent has seen a $21 trillion increase in its wealth, while the bottom half of Amer
Although I am a strong proponent of free markets and capitalism, I must agree with Bernie and Elizabeth W on this issue..
Imagine being silly enough to say this is unreasonable ——-> “It would start with a 1 percent tax on net worth above $32 million for a married couple. That means a married couple with $32.5 million would pay a wealth tax of just $5,000”.
The VAST majority of people who will complain about this and call it “communism” will be people who have NO chance, under any circumstances, of EVER making enough money to be covered by it.
But Americans are brainwashed, so you’ll get people who make less than $50k/year screaming that Bernie is a communist demon.
I think the counterargument to this is that this represents a starting point for a wealth tax, not the endpoint. As you point out on Twitter, the average American exceedingly unlikely to be worth $32.5 million in their lifetime, and as you point out here, if you were worth $32.5 million, a tax of $5,000 / year wouldn’t be a burden.
With that said, I think it’s also very unlikely that this will be where it stops. The modern income tax started as a 1% levy on incomes over $3,000 (roughly $75,000 today) and with a top rate of 7% on incomes over $500,000 (roughly $12.7 million today). This then exploded upward to cover the cost of the First World War and has varied since then (with the top rate reaching its peak in the 1950s at 92%). I think that given the history of the income tax, it is quite likely that once a wealth tax is in place, it will be expanded to bring in additional funds to cover new spending.
So, while I may never have $32.5 million in assets, I can see myself amassing several million in assets by the time I retire. I also find it very easy to believe that in the couple of decades between now and then, this wealth tax has been expanded to cover those with wealth of over $5 million or even those with more than $1 million in assets. After all, the logic of “what’s $5,000” can be just as easily applied to someone with $1 million in assets as it is to someone with $32 million.
The difference is that while most people have no chance of ever reaching $32 million in assets, saving a million or two over a lifetime is an achievable goal for a significant minority of Americans. Just maxing out 401(k) contributions (without including matching or interest accumulation) over the course of a career would net you about $800,000.
I think this is the concern that’s shared by millions of Americans when they hear Bernie and Warren railing against “the rich” and talking about a wealth tax. It’s not that it’s going to impact them now, or that as it is proposed will ever impact them, but rather that “rich” will be subsequently redefined in a way that does impact them.
“…or even those with more than $1 million in assets.”
this is totally unrealistic. that would never, ever get by Congress under any circumstances. do you know how many Americans close to retirement have a net worth of between $1 and $2 million? It’s a lot. The idea that Bernie Sanders or Elizabeth Warren or their predecessors in the Progressive movement would do anything to undermine “average” retirees is wildly implausible and indeed it’s antithetical to their entire agenda.
i know you didn’t mean it this way, but your comment is tantamount to fearmongering. there is no indication whatsoever that Bernie Sanders and Elizabeth Warren are out to rob people of a comfortable retirement by redefining “rich” to include $750k (or something) in a retirement fund.
seriously, think about what you’re saying. that’s ridiculous.
I would disagree that I’m fearmongering. I would contend that I’m expressing the reasonable concern that, given the dramatic expansion of the modern income tax regime during the 20th century, a similarly massive expansion of a wealth tax system in the 21st century would not be unprecedented.
I never claimed that Sanders and Warren were looking to rob average Americans out of a comfortable retirement. A 1% tax on assets exceeding $1 million isn’t going to lead anyone into ruin. If you’ve managed to accumulate that much money, you can afford such a tax. The vast majority of Americans will retire with far less. That said, while it wouldn’t put people in the poorhouse, would have a non-negligible impact on their post-retirement lifestyle.
I was also explicitly making the argument that this isn’t about what Sanders or Warren would do in the here and now. It’s about the establishment of a system which, once established, will be expanded by future (left or right leaning) populist politicians. Setting the threshold to $1 million would impact between 10% and 12% of American households. This isn’t an insignificant percentage, but it is a far cry from a majority. It is certainly a percentage of the vote that some future populist politician (again, not Sanders or Warren) could afford to ignore (as an example, the Republican party consistently ignores the black vote which is a similar percentage of the population).
My point is not that a wealth tax of 1% on assets of more than $32 million is going to impact me. It isn’t, and if it does, that’s a champagne problem. My point is that it represents the establishment of a new system of taxation that, based on history, is likely to be expanded in ways that may very well impact me. Therefore, it is reasonable for me to register my opposition to it now in its current form, because it is easier to oppose the creation of a new system than it is to resist the expansion of an existing one.
So yes, I’ve thought about this, and I appreciate that you might not agree with my argument, but I don’t think there is a reasoned case to be made that my point is “ridiculous”.
Your point is perfectly reasonably made. It is not that hard to go from A to B, so it becomes a sort of “moral hazard” for future politicians.
I have neither affection nor antipathy for billionaires. However, I don’t understand why a wealth tax is superior to capital gains and income tax.
To my knowledge, most very wealthy people got that way by earning high returns on their assets. Suppose $1BN principal is returning 10% or $100MM annually, in income and capital gains. A 20% combined income and capital gains tax on that return is $20MM, which is the same as a 2% tax on the principal (the “wealth”). Make it a 40% income and cap gain rate and you’ve got a 4% wealth tax.
of course, you’d have some timing issues as income and gains can be deferred, and you’d have to deal with territorial and inheritance issues. But you’d also avoid the valuation issues of a wealth tax, which will be very substantial since most very wealthy people hold private companies, real estate, and other non-traded, non-quoted assets.