If a modest 2 percent wealth tax on a fraction of the richest households in the U.S. was in place this year, it would have raised enough funds to pay for the next three decades of President Joe Biden’s student debt cancellation plan, new data shows.
A reportThe Institute on Taxation and Policy released Thursday’s findings that a 2 percent wealth tax on households over $30,000,000, or the top 0.25 per cent of households, would have raised almost $415 billion this fiscal year.
This could pay for a wide swath of important federal programs, including Biden’s plan to cancel up to $20,000 of debt for certain borrowers, which the Congressional Budget Office (CBO) EstimateThe cost of the next 30 year’s infrastructure will be $400 billion more than it was in 2005.
The wealth tax could also serve as a way to close the gap between the richest and poorest portions of the public — both by potentially uplifting middle- and low-income families and by cutting into wealth hoarded by the wealthiest Americans.
The wealth gap is expanding and there is almost no regulation to address it. ITEP’s report found that more than one in four dollars of wealth in America is owned by households with a net worth over $30 million. This year, the US has an estimated $26 trillion wealth.
This is a very small percentage of households that can afford this amount of money. By contrast, according to the Federal ReserveThe bottom 50 percent of Americans have $4.41 trillion, which is about 3 percent of the wealth in the U.S.
“Economic inequality in the U.S. is large, growing and highly unpopular,” ITEP wrote. “Excessive concentration of wealth runs counter to our national aspiration for genuine equality of opportunity, and it saps the vitality of our democracy through the consolidation of power and influence.”
ITEP also found that wealthiest households are concentrated within certain areas of the country. New York is home to over 21 percent of households with over $30 million in assets, followed by California, Florida, and Texas at around 10 percent.
ITEP recommends that lawmakers implement an ongoing or one-time tax for unrealized capital gains to reduce wealth inequality. This is an option that would be beneficial for households with wealth exceeding $30 million.
ITEP calculates that such a tax can raise between $529billion and $3.9 trillion depending upon the details. It is applicable to households with wealth exceeding $10 million.
Progressive lawmakers and advocates have long supported a wealth tax. They believe it is unethical for people to become billionaires or accumulate millions of dollars while others suffer homelessness, starvation, or are forced into rationing medications to survive. Indeed, despite billionaires’ massive wealth, They are often able to exploit the current tax code to pay even lower tax rates than the average American — allowing themTo hoard more wealth.
In recent years, Democrats have advocated for a wealth tax. Last year, Sen. Elizabeth Warren (D.Massachusetts). IntroducedA bill that would implement a 2 per cent wealth tax on wealth exceeding $50 million. This would be increased to 3 per cent on wealth exceeding $1 billion.
In his budget for 2023, President Joe Biden proposedA minimum 20% tax on income earned by households with assets exceeding $100 million. Although not a wealth tax, it would slightly change what the government considers income to include unrealized capital gain, which is a step towards what progressives have called.
Popular is the idea that wealth taxes should be implemented. A Data for Progress survey conducted earlier this year found that Warren’s proposal is supported by 68 percent of likely voters, including 81 percent of Democrats and 53 percent of Republicans.
