Independent Vermont Sen. Bernie Sanders, who is vying for the Democratic Party’s nomination in 2020, unveiled his plan to tax the assets of the nation’s wealthiest individuals – replete with calls for the creation of a “national wealth registry.”
According to Sanders, the registry – in combination with “significant additional third party reporting requirements” – would help ensure the country’s rich are not able to evade the tax.
As opposed to taxes levied on income and payrolls, a wealth tax would target the value of accumulated assets owned by rich Americans – or their net worth. The problem? It would require the determination of the value of things like art, jewelry, real estate holdings, business ownership stakes, etc., on a continual basis.
“The premise of this wealth tax would presumably work much like our current estate tax where the decedent’s estate tax is calculated as a percentage of the total value of the estate's assets (cash, investments, real estate and more) minus a variety of deductions, including charitable contributions,” Geoffrey Weinstein, special counsel in the Tax, Trusts & Estates Department of Cole Schotz, told FOX Business. “But this type of tax would be implemented on a year to year basis.”
While the details of Sanders’ registry have not yet been specified, Weinstein said it would likely be generated through cross-reporting of various IRS forms – like W-2s, 1099s – and filings with the Securities Exchange Commission (like 10K and 8K reports, as well as proxy statements). Enforcement, he said, would presumably be delegated to the U.S. Treasury Department.
Sanders’ campaign did not return FOX Business’ request for further details.
Chris Edwards, director of tax policy studies at the Cato Institute and editor of www.DownsizingGovernment.org, told FOX Business that Sanders would use the registry to track assets of the wealthiest Americans, but the task could be much more difficult than it sounds.
“There would be huge problems in assigning values to people’s global wealth including such items as private business assets and collectibles which don’t have ready market values,” Edwards said. “And the IRS would not find the vast piles of assets that Americans would hide abroad if such a tax were imposed. Huge amounts of wealth would not be 'registered' under Sanders’ plan because of evasion.”
Sanders’ wealth tax would be imposed on married couples with a net worth of $32 million or more – and individuals with at least $16 million. Rates, beginning at 1 percent, would reach as high as 8 percent for married couples with $10 billion or more worth of assets (individuals with $5 billion).
The plan aims to cut in half the wealth of billionaires over the course of 15 years.
Sanders estimates the tax would raise $4.35 trillion over the course of the decade and the funds would be used toward parts of his other proposals – including housing, health care and universal childcare.
An estimated 180,000 households would be subject to the tax set with those parameters.
Fellow Democratic 2020 contender Massachusetts Sen. Elizabeth Warren has a wealth tax proposal of her own, though hers is less aggressive in comparison. Warren proposed a 2 percent tax on assets above $50 million, rising to 3 percent for those with more than $1 billion in assets.