Cupid’s Span (Claes Oldenburg and Coosje van Bruggen) and GAP Building, SF Waterfront. Photo: Jeffrey St. Clair.
How can the U.S. reverse democracy-distorting concentrations of wealth and power? A federal annual wealth tax must be part of the equation.
The richest 0.1 percent — the top one-thousandth of households, who are all worth over $50 million — have seen their wealth surge since the beginning of the 2020 Covid Pandemic. U.S. billionaires have seen their wealth double since 2019, with the top 19 U.S. billionaires adding $1 trillion to their wealth in 2024 alone.
Politicians and the public are waking up to the disruptive impact of billionaires, as chronicled in my recent book, Burned by Billionaires: How Concentrated Wealth and Power are Ruining Our Lives and Planet. But most policy prescriptions fall short of truly addressing the accumulated wealth and power of the richest 0.1 percent.
While Congress was busy passing an enormous tax cut for the ultra-wealthy, campaigners from Massachusetts to Washington State have put forward several state-level “millionaire taxes” that are essential ways for states to build fairer tax systems with or without federal participation.
Hiking top income tax rates collects more revenue from the “working rich” — those with high incomes like doctors, lawyers, and CEOs. Those with substantial asset wealth have found countless ways to play shell games and reduce their income taxes, including their capital gains tax burden. (Ray Madoff’s new book, The Second Estate: How the Tax Code Made An American Aristocracy, covers their crafty avoidance mechanisms).
California’s proposed emergency one-time 5 percent wealth tax on billionaires is the boldest of the state initiatives. It has the vulnerability of any progressive state level policy: The global billionaire class moves their money around the planet into tax havens that compete for business. Even mere threats billionaires make that they’ll move have rattled state voters. (It’s important to note that post-millionaire’s-tax Massachusetts has seen notably low attrition — there was some bluffing going on.)
There is no taxation silver bullet because America’s wealthy hire phalanxes of “wealth defense industry” attorneys and money managers with ample tax avoidance tools at their disposal. (See my book The Wealth Hoarders for more.)
The U.S. needs an “ecosystem” of tax reforms including patches to the income tax, a robust inheritance tax (to replace the porous estate tax), and meaningful oversight enforcement — so billionaires can’t wriggle their way past borders to avoid paying their fair share.
An essential cornerstone of reducing extreme wealth inequality is a federal annual wealth tax with severe penalties for billionaires that renounce their citizenship to avoid taxation. Two bold proposals have been introduced in the last few weeks that should be celebrated and supported.
Senator Bernie Sanders and Rep. Ro Khanna (D-CA) have introduced the “Make Billionaires Pay Their Fair Share Act” that would levy a 5 percent wealth tax on households with over $1 billion, mirroring the California billionaire tax initiative at the federal level. The tax would raise an estimated $4.4 trillion over ten years, though the conservative Tax Foundation estimates avoidance will reduce the revenue to closer to $3.3 trillion. The tax proposal invests 1 percent of revenue in strengthening enforcement and levies a 60 percent “exit tax” on billionaires renouncing their U.S. citizenship.
The bill includes a number of popular provisions including a $3,000 direct payment to every person earning less than $150,000 a year, in the first year (or $12,000 for a family of four). Other provisions include a reversal of Trump budget cuts to Medicaid, expanded health coverage, investments in affordable housing, and a minimum salary of $60,000 for all public school teachers.
Senator Elizabeth Warren has reintroduced an updated version of her 2021 “Ultra-Millionaire Tax”, with lead House sponsors Rep. Pramila Jayapal (D-WA) and Rep. Brendan Boyle (D-PA). This proposal would levy a 2 percent annual wealth tax on households and trusts valued at over $50 million. It would add an additional 1 percent annual surtax on wealth and trusts over $1 billion.
While Sanders-Khanna wealth tax would focus entirely on the estimated 950 U.S. billionaires, the Warren tax proposal would levy taxes on the wealthiest 260,000 households, excluding 99.85 percent of taxpayers. The Warren wealth tax would raise an estimated $6.2 trillion over ten years. As David Dayen writes in The American Prospect, “Inequality has boomed so much in the 2020s that a 2 percent wealth tax on multimillionaires initially introduced in 2021 would yield more than twice as much revenue today.”
The revamped Warren-Jayapal-Boyle proposal responds to the aggressive tax avoidance by the wealthy and their “wealth defense industry” enablers, which our disinvested oversight systems struggle to respond to. The legislators suggest levying taxes on wealth in trusts and assets held offshore, and modernizing the IRS to better catch evasion and track complex asset valuations of the ultra-rich. The proposal also includes a 40 percent “exit tax” on multi-millionaires and billionaires that renounce their U.S. citizenship.
While the revenue is not earmarked, the cosponsors of the legislation envision massive investments in affordable housing, universal childcare, expanded Medicare eligibility, and tuition-free community college.Both these wealth tax proposals expand the national conversation and vision about what is possible if we tax oligarchic concentrations of wealth and power. They don’t seek to break up big fortunes as an end in and of itself — they directly outline the abundant opportunities and benefits Americans could reap from more revenue.
Both these wealth tax proposals expand the national conversation and vision about what is possible if we tax oligarchic concentrations of wealth and power. They don’t seek to break up big fortunes as an end in and of itself — they directly outline the abundant opportunities and benefits Americans could reap from more revenue.
It’s almost certain that taxing wealth will be at the heart of 2028 presidential election discourse. The policy is incredibly popular across political parties and feels like common sense to hundreds of millions of people across the nation. Those who oppose new taxes should consider why they’re so out of step — and get on board fast.