January 24, 2019

Senator Warren Unveils Proposal to Tax Wealth of Ultra-Rich Americans

Annual Tax on Richest 0.1% of Americans Would Generate $2.75 Trillion in Revenue Over Ten Years

Read Letter from Leading Economists with Revenue Estimates for the Proposal

Read Letters from Leading Constitutional Scholars on Constitutionality of the Proposal

Washington, DC - United States Senator Elizabeth Warren (D-Mass.) today unveiled the Ultra-Millionaire Tax, a bold proposal to tax the wealth of the richest 0.1% of Americans.  The legislation, which applies only to households with a net worth of $50 million or more, is estimated by leading economists to raise $2.75 trillion in tax revenue over a ten-year period.

For decades, a small group of families has raked in a massive amount of the wealth American workers have produced, while America's middle class has been hollowed out.  The result is an extreme concentration of wealth not seen in any other leading economy. According to an analysis from economists Emmanuel Saez and Gabriel Zucman from the University of California-Berkeley, the richest top 0.1% has seen its share of American wealth nearly triple from 7% to 20% between the late 1970s and 2016, while the bottom 90% has seen its share of wealth decline from 35% to 25% in that same period. Put another way, the richest 130,000 families in America now hold nearly as much wealth as the bottom 117 million families combined.

Our tax code focuses on taxing income, but a family's wealth is also an important measure of how much it has benefitted from the economy and its ability to pay taxes. Judged against wealth, our tax system asks the rich to pay a lot less than everyone else. According to Saez and Zucman, the families in the top 0.1% are projected to owe 3.2% of their wealth in federal, state, and local taxes this year, while the bottom 99% are projected to owe 7.2%.  

"It's time to fundamentally transform our tax code so that we tax the wealth of the ultra-rich, not just their income," said Senator Warren. "By asking our top 75,000 households to pay their fair share, my proposal will help address runaway wealth concentration and at the same time accelerate badly needed investments in rebuilding our middle class."

The Ultra-Millionaire Tax taxes the wealth of the richest Americans. It applies only to households with a net worth of $50 million or more-roughly the wealthiest 75,000 households, or the top 0.1%. Households would pay an annual 2% tax on every dollar of net worth above $50 million and a 3% tax on every dollar of net worth above $1 billion. Because wealth is so concentrated, Saez and Zucman project that this small tax on roughly 75,000 households will bring in $2.75 trillion in revenue over a ten-year period. The Ultra-Millionaire Tax would impose:

  • Zero additional tax on any household with a net worth of less than $50 million (99.9% of American households)
  • 2% annual tax on household net worth between $50 million and $1 billion
  • 1% annual Billionaire Surtax (3% tax overall) on household net worth above $1 billion

 The Ultra-Millionaire Tax also includes strong anti-evasion measures, including but not limited to:

  • a significant increase in the IRS enforcement budget; 
  • a minimum audit rate for taxpayers subject to the Ultra-Millionaire 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 that builds on existing tax information exchange agreements adopted after the Foreign Account Tax Compliance Act.

Letter from Saez and Zucman with a revenue estimate for the proposal can be read here.

Letters on the constitutionality of the proposal can be read here