The 100 richest Americans would see their collective fortune shrink by $78 billion each year under a wealth tax introduced Monday by Sen. Elizabeth Warren and her progressive allies, according to a new analysis by Bloomberg News.
The proposal, known as the "Ultra-Millionaire Tax," would impose a 2% annual tax on the net worth of U.S. households $50 million and above, and would add an additional 1% levy on fortunes exceeding $1 billion. It's nearly identical to the wealth tax that Warren introduced during her 2020 presidential campaign.
That would mean Amazon founder Jeff Bezos, the richest person in the world, would pay an additional $5.4 billion in taxes if President Biden signed the legislation into law, according to an updated wealth tax calculator released by Warren. Tesla CEO Elon Musk would also owe roughly $5.4 billion in taxes, while Microsoft founder Bill Gates' tax bill would increase by about $4.1 billion. Facebook CEO Mark Zuckerberg would have to fork over an additional $3 billion.
The wealthiest 100 Americans saw their wealth grow by $598 billion in 2020, according to the Bloomberg Billionaires Index, even as millions of Americans lost their jobs as a result of the coronavirus pandemic and subsequent economic downturn.
Warren, D-Mass., estimates the tax would affect about 100,000 households in the U.S., or roughly 0.05% of the population, and would generate about $3 trillion in revenue over the next decade, citing University of California, Berkeley economists Emmanuel Saez and Gabriel Zucman.
In an effort to prevent wealthy Americans from dodging the tax, the bill would create a 40% tax on net worth above $50 million for people who renounce their U.S. citizenship in order to avoid paying the fee and a 30% minimum audit rate for households subject to the tax. It would also provide the IRS with an additional $100 billion to help with enforcement.
Warren suggested revenue generated by the tax could go toward investments in child care and early education, K-12 and 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," she said in a statement.
But such a measure is unlikely to be enacted in the near future: President Biden did not endorse a wealth tax during the campaign, and it is not one of the revenue-raisers the new administration is exploring to offset the costs of the $1.9 trillion coronavirus relief package and other planned spending measures. Treasury Secretary Janet Yellen said last week that such a tax would have "very difficult implementation problems."
Biden has previously said he will pay for long-term spending with tax increases on Americans earning more than $400,000 annually and corporations. The nation's debt is on track to surpass $30 trillion this year as the deficit, which already hit a record $3.1 trillion in fiscal year 2020, continues to surge.
Critics of a wealth tax say that it would hurt U.S. competitiveness, discourage investment and ultimately be ruled unconstitutional by the courts.