Senator Elizabeth Warren (D., Mass.) will propose a so-called wealth tax on Americans with more than $50 million in total assets, two economists helping develop the policy told the Washington Post Thursday.
The proposal, developed by University of California, Berkeley economists Emmanuel Saez and Gabriel Zucman, calls for a 2 percent tax on Americans with more than $50 million in assets and a 3 percent tax on those with more than $1 billion in assets, on top of the income tax they already pay.
The tax would raise $2.75 trillion over ten years and would affect just 0.1 percent of the population, or 75,000 families, according to Saez and Zucman.
“The Warren wealth tax is pretty big. We think it could have a significant effect on wealth concentration in the long run,” Saez told the Post. “This is a very interesting development with deep root causes: The fact inequality has been increasing so much, particularly in wealth, and the feeling our current tax system doesn’t do a very good job taxing the very richest people.”
The proposal seeks to address the tax evasion that fiscal conservatives argue would reduce the efficacy of any wealth tax by allocating additional resources to the IRS, imposing a one-time penalty on Americans who renounce their citizenship to avoid the tax, and requiring that a certain percentage of those affected by the tax undergo a yearly audit.
Academic critics of the wealth tax have previously called into question its constitutionality, citing the prohibition against “direct” taxes not apportioned by the states according to population.