To understand why the oligarchy in the US absolutely hates the idea of Bernie Sanders or Elizabeth Warren becoming president, one need look no further than their proposals for a tax on wealth to serve two goals: provide income to fund their progressive agendas and to reduce the staggering levels of inequality in the US.
Sen. Bernie Sanders has unveiled his plan to directly tax the wealth of millionaires and billionaires — and it goes substantially further than Sen. Elizabeth Warren’s plan to do the same.
The proposal would cut the wealth of billionaires in the United States in half in 15 years and entirely close the gap in wealth growth between billionaires and the average American family, according to University of California Berkeley economists Gabriel Zucman and Emmanuel Saez, who advised Sanders on his plan. Hitting the richest 180,000 American households, Saez and Zucman estimate the tax would raise $4.35 trillion over the next decade, which Sanders says would go toward paying for his biggest policies, including Medicare-for-all, affordable housing, and universal childcare.
The wealth tax has been one of Sen. Elizabeth Warren’s signature policy proposals on the campaign trail, what she sells as a “two-cent tax” on the 75,000 wealthiest families in the country: She’s proposing a 2 percent tax on household assets above $50 million and 3 percent for households with assets worth more than $1 billion.
But Sanders’s campaign has expanded the idea, with more and higher tax brackets that kick in at a lower wealth threshold.
Here’s how it would work. Sanders wants to levy a 1 percent tax on wealth above $32 million, for married couples, and then slowly increase the tax for wealthier households: a 2 percent for wealth between $50 to $250 million; 3 percent for wealth from $250 to $500 million; 4 percent from $500 million to $1 billion, 5 percent from $1 to $2.5 billion, 6 percent from $2.5 to $5 billion, 7 percent from $5 to $10 billion, and 8 percent on wealth over $10 billion. Same thing goes for super-rich single people, except the wealth thresholds are cut in half. In other words, an unmarried person with $16.5 million in wealth would pay a $5,000 tax, as would a married couple with $32.5 million in net worth.
The public radio program On Point on October 23, 2019 had a debate on the merits of the wealth tax between economist Emmanuel Saez, who supports ythis plan and has advised both Sanders and Warren on this issue, and Lawrence Summers, who served as economic advisor to Bill Clinton an dislikes it. You can listen to the roughly 30-minute debate here starting at the 13:25 mark.
Summers is solidly part of the Democratic party establishment and thus is a protector of oligarchic interests and it was comical to see how he tries to find ways to criticize this proposal in apocalyptic terms, warning that this could collapse the US economy. Note that Warren’s wealth tax is just 2% of wealth over $50 million. Summers says that this could cause hardship to some people because even though they may possess such huge amounts of wealth, they may not have the ready cash to pay the tax. My response to him would have been that such people need better accountants.
He even makes the risible argument that we should not try to tear down the wealthy and that this is a bad time to for such proposals in the face of the Chinese threat to US economic dominance. He says that workers and corporations and the wealthy should work together for the good of the country and he brings out that tired old bromide for doing nothing, that we should focus on closing loopholes in the tax code to make it more progressive. His idea that the oligarchy will make common cause with the rest of us is ridiculous. They have been waging a vicious class war for decades. It is when they are under threat that they come out with this kumbaya nonsense.
Sanders and Warren are quite right that changing the nature of the income tax to close loopholes and make it more progressive is necessary but not sufficient. We need to tax excessive wealth as well.