Bernie Is Right: There Shouldn't Be Any Billionaires

Yesterday, as soon as Bernie announced his wealth tax proposal-- something he's been working on long before he ran for president in 2016-- Thomas Kaplan was working to undermine its authenticity for NY Times readers by insinuating he was just trying to one-up Elizabeth Warren. "With the proposal," wrote Kaplan in his second paragraph, "Mr. Sanders is embracing an idea that has been a centerpiece of the campaign of his top progressive rival, Senator Elizabeth Warren. But while Ms. Warren came first, Mr. Sanders is going bigger. His wealth tax would apply to a larger number of households, impose a higher top rate and raise more money."

I spoke with Stephanie Kelton about the plan since I knew she had been working on it as a top economic advisor to Bernie, first in the Senate when he was the ranking member of the Budget Committee and then during the 2016 campaign. She told me that Bernie had her and Steve Wamhoff, his tax expert on the Senate Budget Committee, working "on a wealth tax back in 2015. We did a lot of work on it, had meetings at the Joint Committee on Taxation), made recommendations, etc. It takes a long time to do this kind of thing carefully. The numbers came together with input from two of the country’s leading experts on inequality, Emanuel Saez and Gabriel Zucman. It’s clear that the Sanders proposal is about addressing the kinds of extreme concentrations in wealth that are corrupting our democracy." The folks at Patriotic Millionaires agree. In their celebratory e-mail yesterday, they said they "need each and every one of the 2020 presidential candidates to enunciate the problem clearly and put forth real, substantive solutions to wealth inequality in this country." Morris Pearl, former managing director at Blackrock, Inc., and Chair of the Patriotic Millionaires, wrote that "The wealthiest people in this country haven't been paying their fair share for a long time, and part of that problem is because our tax code only taxes the wealthy based on how much income they choose to take each year. The very rich get money not from earning it each year, but from spending wealth that they have already made. If our tax laws only target one without touching the other, then rich folks like me will continue to find ways to game the system and our inequality crisis will continue to get worse. There are many ways to address wealth inequality, and Senator Sanders's wealth tax proposal this morning is a welcome addition to our national tax debate... We are thrilled to see this proposal and look forward to more dialogue on this critical issue moving forward in the debates."

In a note to his supporters yesterday, Bernie wrote that "Our tax on extreme wealth would only apply to the wealthiest households in America and would cut the wealth of billionaires in half over 15 years-- which would substantially break up the concentration of wealth and power of this small, privileged class."

This is how much more in taxes some of the richest people in America would owe this year:

• The Walton family - $14.8 billion
• Jeff Bezos - $8.9 billion
• Charles Koch - $3.2 billion
• Sheldon Adelson - $2.6 billion
• Rupert Murdoch - $1.28 billion

Our plan would raise more than $4 trillion over the next decade and anyone with a net worth of less than $32 million would not see their taxes go up under this plan.

Now, I have never understood how someone could have tens and hundreds of billions of dollars and feel the desperate need for even more. I would think that with the amount of money the 0.1 percent of this country has, they might just be able to get by.

But the truth is, for the past several decades there has been a massive transfer of wealth from those who have too little to those who have too much.

And for the sake of our democracy and for working families all over America who are struggling economically, that has got to change.

In my view, a nation cannot survive morally or economically when so few have so much and so many have so little. Millions of people across this country struggle to put bread on the table and are one paycheck away from economic devastation, while the wealthiest people in this country have never had it so good.

It has got to stop.

And when we are in the White House, it will.

Bernie's proposal taxes accumulated wealth, not just income and Kaplan wrote that it "is particularly aggressive in how it would erode the fortunes of billionaires. His tax would cut in half the wealth of the typical billionaire after 15 years, according to two economists who worked with the Sanders campaign on the plan. Mr. Sanders would use the money generated by his wealth tax to fund the housing plan he released last week and a forthcoming plan for universal child care, as well as to help pay for Medicare for all. He quotes Bernie: "Let me be very clear: As president of the United States, I will reduce the outrageous and grotesque and immoral level of income and wealth inequality. What we are trying to do is demand and implement a policy which significantly reduces income and wealth inequality in America by telling the wealthiest families in this country they cannot have so much wealth."

Asked if he thought billionaires should exist in the United States, Mr. Sanders said, “I hope the day comes when they don’t.” He added, “It’s not going to be tomorrow.”

“I don’t think that billionaires should exist,” he said, adding that there would always be rich people and others with less money. “This proposal does not eliminate billionaires, but it eliminates a lot of the wealth that billionaires have, and I think that’s exactly what we should be doing.”

...Mr. Sanders, of Vermont, would create an annual tax that would apply to households with a net worth above $32 million-- about 180,000 households in total, or about the top 0.1 percent, according to the economists who worked on the plan.

He would create a 1 percent tax on net worth above $32 million, with increasing marginal rates topping out at 8 percent on net worth over $10 billion. For single filers, the brackets would be halved, meaning the tax would kick in at $16 million.

By contrast, the wealth tax proposed by Ms. Warren, of Massachusetts, would apply to households with a net worth above $50 million-- an estimated 70,000 households in total.

The structure of her plan is simpler: She would apply a 2 percent tax on net worth from $50 million to $1 billion, and a 3 percent tax on net worth above $1 billion. Unlike the Sanders plan, the tax brackets would be the same for married and single filers.

• $32 million to $50 million net worth: 1 percent marginal tax rate
• $50 million to $250 million: 2 percent
• $250 million to $500 million: 3 percent
• $500 million to $1 billion: 4 percent
• $1 billion to $2.5 billion: 5 percent
• $2.5 billion to $5 billion: 6 percent
• $5 billion to $10 billion: 7 percent
• Over $10 billion: 8 percent

Elizabeth Warren’s wealth tax proposal

• $50 million to $1 billion: 2 percent
• Over $1 billion: 3 percent

Note: The brackets shown for the Sanders proposal are for married filers; the brackets would be halved for single filers. The Warren proposal uses the same brackets for married and single filers.

Mr. Sanders’s tax is projected to raise $4.35 trillion over a decade, while Ms. Warren’s is projected to raise $2.6 trillion over the same time period. Those estimates were produced by Emmanuel Saez and Gabriel Zucman, two economists at the University of California, Berkeley, with whom both the Sanders and Warren campaigns consulted as they developed their proposals. (The projection for Ms. Warren’s plan differs slightly from their original estimate of $2.75 trillion earlier this year.)

“The Sanders plan is really pitched at the idea that we don’t want billionaires and decabillionaires to be billionaires and decabillionaires for as long as they currently are,” Mr. Saez said. “It’s going to erode their fortunes much faster than the Warren wealth tax.”

Mr. Sanders included several steps in his plan to enforce the tax, including creating a “national wealth registry,” increasing funding for the Internal Revenue Service and requiring audits of many taxpayers who are subject to the wealth tax, including all billionaires.

Mr. Saez and Mr. Zucman calculated how the Warren and Sanders wealth taxes would have affected the fortunes of the richest Americans had each been in effect since 1982. The fortune of Jeff Bezos, the Amazon founder who Forbes said was worth $160 billion last year, would have been $87 billion under the Warren plan and $43 billion under the Sanders plan.

Over all, the economists found, the cumulative wealth of the top 15 richest Americans in 2018-- amounting to $943 billion-- would have been $434 billion under the Warren plan and $196 billion under the Sanders plan.

Mr. Sanders is hardly a newcomer to the idea of a wealth tax. In a 1997 book, he wrote that it was “time, high time, to establish a tax on wealth similar to those that exist in most European countries.” In 2017, he included a wealth tax on a list of financing options for Medicare for all.

Ask yourself, do you want the 2020 election to be about the pros and cons of runaway economic inequality and how to fix it-- or about whose family is more corrupt, Trump's or Biden's, who lies more, Trump or Biden, who is further alone the path to complete senility, Trump or Biden-- and who is the lesser evil, Trump or Biden? Let's have a real debate about real and fundamental issues.