Jeff Bezos would pay more than $ 5 billion a year under Warren’s wealth tax

Jeff Bezos is said to owe $ 5.7 billion in taxes for 2020 under the Ultra-Millionaire Tax Act proposed by a group of Senate and House Democrats on Monday.

Sen. Elizabeth Warren, D-Mass .; Sen. Bernie Sanders, I-Vt., And others on Monday unveiled their proposed wealth tax, saying it would bring trillions in much-needed income and help narrow a wealth gap that has only widened during the pandemic. The tax would be an annual tax of 2% on assets in excess of $ 50 million and 3% on assets in excess of $ 1 billion.

Warren said the tax would only affect the richest 100,000 American families – or the highest 0.05% – and bring in about $ 3 trillion over 10 years. She said the additional revenue would go to help pay for childcare, educational infrastructure and clean energy. It is essentially the same tax that Warren defended during her campaign, when the slogan “two cents” became a popular rallying cry at her rallies among those who supported the tax. Warren often argues that since the wealth tax rate is 2%, “it’s only two cents of every dollar after $ 50 million.”

Warren said the tax is even more urgent during the Covid crisis, as it exposed and accelerated the US wealth gap.

“We understand the direction we are heading. This pandemic has created more billionaires. The people at the top are not barely hanging by their fingernails,” Warren said Tuesday on CNBC’s “Squawk Box.”

Critics say the tax may not be constitutional and would be easily paid by the wealthy. Most European countries have abolished the wealth tax because they brought in less income than expected and could be easily avoided by millionaires and billionaires.

“The lesson from other countries’ experiences with wealth taxes should serve as a warning that the US should avoid one at all,” said Erica York of the conservative-oriented Tax Foundation. A wealth tax would be plagued with many administrative and compliance issues, as well as avoidance and evasion issues. It would be a tremendous administrative challenge to implement, and it is not clear, even with more resources, that the IRS could collect a wealth tax efficiently. . “

To combat evasion, the Ultra-Millionaire tax would provide $ 100 billion to the Internal Revenue Service for tougher enforcement. It would also include a 30% minimum audit for households with $ 50 million or more in assets, as well as new technology tools to help the IRS value hard-to-value assets such as art or real estate. For those who want to move to another country and renounce their citizenship to avoid the tax, the proposal also includes a 40% “exit tax” for those attempting to leave.

“The implementation part really is a lot easier than it looks,” said Warren. “We’ve learned from some of the mistakes they’ve made in Europe. This version of the wealth tax covers all of your properties. It doesn’t matter whether it’s in stock, in real estate or in racehorses. Everything is covered, so it’s covered. makes no sense in moving properties. Also wherever you are, it is covered whether you keep it here in the US, whether you own it in the Cayman Islands. “

About half of the income from the tax would come from billionaires, who added more than $ 1 trillion to their net worth during the pandemic, according to Warren. According to calculations by the Institute for Policy Studies, Jeff Bezos, the world’s richest person, would owe $ 5.7 billion under the Ultra-Millionaire tax by 2020. According to the analysis, he would still have had a net worth of more than $ 185 billion after tax.

Elon Musk is said to be owed $ 4.6 billion in 2020 and will still have net worth in excess of $ 148 billion at the end of the year. Bill Gates is expected to pay $ 3.6 billion by 2020 and Mark Zuckerberg is expected to pay $ 3 billion.

“Billionaires wealth tax alone would fund nearly three-quarters of President Biden’s entire $ 1.9 trillion pandemic bailout package currently pending in the Senate,” said Chuck Collins, director of the inequality program. Institute for Policy Studies.