Bernie has roared.
With fellow Democrat Elizabeth Warren gobbling up market share among liberal Democrats, Bernie Sanders has one-upped Warren with a proposed tax on “extreme wealth.” Warren was the first to propose a wealth tax on the superrich, but Sanders has gone further, more than doubling Warren’s proposed tax rate on billionaires.
Warren would impose an annual 2% tax on all personal wealth above $50 million, so a family worth $100 million would owe 2% of $50 million, or $1 million. The tax would rise to 3% for assets above $1 billion. Warren says her wealth tax would raise $275 billion per year, which she’d use to pay off student debt for millions, cover college costs for the majority of students and finance universal child care.
The Sanders plan has a lower threshold for wealth, and higher tax rates. His plan has 8 different tax levels, starting with a 1% tax on wealth above $32 million. The rate would rise to 2% on wealth from $50 million to $250 million, with a top rate of 8% on wealth over $10 billion. Sanders says his plan would raise $435 billon per year, which he’d use to fund a single-payer health plan, more affordable housing and universal child care.
How high is too high?
A wealth tax is a plausible way to raise large amounts of money from people most able to afford it. But economists who have studied the concept say there’s an “optimal” level of taxation that preserves the stock of wealth subject to taxation, so that the tax generates a stable stream of revenue over time. If it’s above the optimal level, the wealth tax would be “confiscatory” and erode the wealth of the superrich, leaving less wealth to tax. If set too high, a wealth tax would trigger its own demise, since wealth would eventually fall below the thresholds for taxation.
Source: Yahoo! Finance