Warren Takes Aim at Millionaires with Introduction of Wealth Tax

Making good on a past promise, the newest member of the Senate Finance Committee has introduced legislation to impose a wealth tax on so-called “ultra-millionaires.”

Sen. Elizabeth Warren (D-MA) on March 1 introduced the Ultra-Millionaire Tax Act to impose: 

• a 2% annual tax on the net worth of households and trusts between $50 million and $1 billion; and 
• a 1% annual surtax (3% tax overall) on the net worth of households and trusts above $1 billion. 

Citing a 2021 analysis from Emmanuel Saez and Gabriel Zucman from the University of California-Berkeley, Warren contends that the legislation would raise at least $3 trillion in revenue over 10 years without raising taxes on the 99.95% of American households that have net worth below $50 million. 

Cosponsors in the Senate include Sens. Bernie Sanders (I-VT), Sheldon Whitehouse (D-RI), Jeff Merkley (D-OR), Kirsten Gillibrand (D-NY), Brian Schatz (D-HI), Edward Markey (D-MA) and Mazie Hirono (D-HI), along with Reps. Pramila Jayapal (D-WA) and Brendan Boyle (D-PA) who introduced companion legislation in the House of Representatives.  

According to a summary, the legislation would also allocate $100 billion to the IRS for the agency to hire and train additional personnel, modernize IT systems, and implement the new asset valuation, reporting and enforcement requirements for the millionaire tax. It also seeks to address anti-evasion and avoidance by implementing: 

• a 30% minimum audit rate for taxpayers subject to the tax; 
• a 40% “exit tax” on the net worth above $50 million of any U.S. citizen who renounces their citizenship; and
• systematic third-party reporting to build on existing tax information exchange agreements adopted after the Foreign Account Tax Compliance Act, along with penalties for underpayment.

“As Congress develops additional plans to help our economy, the wealth tax should be at the top of the list to help pay for these plans because of the huge amounts of revenue it would generate,” Warren stated in introducing the legislation. “This is money that should be invested in childcare and early education, K-12, infrastructure, all of which are priorities of President Biden and Democrats in Congress. I’m confident lawmakers will catch up to the overwhelming majority of Americans who are demanding more fairness, more change, and who believe it’s time for a wealth tax.” 

When it was announced that she would be joining the Finance Committee, Warren revealed that she planned to introduce legislation to implement a wealth tax on fortunes over $50 million and she appears to have made good on that promise. This also appears to pick up on one of the themes from her presidential campaign, where, for example, she pushed for a financial transaction tax to help pay for her proposed “Medicare for All” plan. 

All in all, Warren’s bill faces a number of steep hurdles—including the Democrats’ narrow Senate majority and the administrative feasibility of implementing such a proposal. But the larger debate surrounding taxing wealth and investments does not appear to be ending anytime soon, as Warren and several other Democrats in Congress have set their sights on using proposed wealth or financial transaction taxes under the guise of “wealth inequality.”