The wealth tax is projected to apply to less than 0.1 percent of U.S. households, and would raise $2.75 trillion over 10 years, Saez said.
Warren’s idea comes alongside other Democratic lawmakers’ plans to raise taxes on the wealthiest Americans to pay for ambitious policy goals, such as a “green new deal” that aims to reduce economic inequality and combat the causes of climate change.
The development has not gone unnoticed by affluent investors and executives, many of whom are meeting this week at the World Economic Forum in Davos, Switzerland.
“By the time we get to the presidential election, this is going to gain more momentum,” Scott Minerd, global chief investment officer of $265 billion Guggenheim Partners, told CNBC earlier this week.
He was referring specifically to freshman Rep. Alexandria Ocasio-Cortez’s proposal for a 70 percent marginal rate on income above $10 million.
While Ocasio-Cortez’s plan is a tax on income, Warren’s proposal would tax wealth. In America, wealth inequality is greater than income inequality.
While the 1 percent of Americans with the highest incomes receive about 20 percent of the total income in the United States, the top 1 percent of wealth holders collectively own more than 40 percent of the nation’s total wealth, according to a report published Wednesday by the Institute on Taxation and Economic Policy arguing for a wealth tax.
The Post reported that Warren has been advised by Saez and Gabriel Zucman, left-leaning economists affiliated with the University of California, Berkeley, on a deal that would levy a 2 percent wealth tax on Americans with $50 million-plus in assets. For Americans with assets above $1 billion, that tax rate would increase to 3 percent.
The newspaper, citing a person familiar with the plan, reported that Warren’s plan would try to counter tax evasion by boosting funding for the IRS, and by levying a one-time tax penalty on people with more than $50 million who try to renounce their U.S. citizenship. It would also require that a certain number of people who pay the wealth tax be subject to annual audits, the Post reported.
Tax-the-rich policies are not a new phenomenon among political candidates. In fact, Trump himself floated a similar measure in 1999 as he explored a presidential bid as a prospective Reform Party nominee.
Trump’s proposal was to impose a one-time 14.25 percent tax on individuals and trusts worth more than $10 million, according to reports at the time.
On Tuesday, Saez and Zucman published an article in The New York Times defending Ocasio-Cortez’s proposal.
“An extreme concentration of wealth means an extreme concentration of economic and political power. Although many policies can help address it, progressive income taxation is the fairest and most potent of them all,” they wrote.