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Democratic lawmakers unveil proposal for Ultra-Millionaire Tax on wealthiest Americans

The tax could bring in at least $3 trillion in revenue over 10 years - without raising taxes on the 99.95% of American households, according to an estimate.

WASHINGTON — U.S. Senator Elizabeth Warren and other Democratic House Representatives introduced legislation on Monday which aims to tax super-wealthy Americans on their net worth.

The proposal, called the Ultra-Millionaire Tax Act, would put a 2% annual tax on the net worth of households and trusts between $50 million and $1 billion. It would also put an additional 1% on households and trusts over $1 billion.

The lawmakers said this would level the playing field and narrow the radical wealth gap.

"A wealth tax is popular among voters on both sides for good reason: because they understand the system is rigged to benefit the wealthy and large corporations," said Senator Warren in a statement. "As Congress develops additional plans to help our economy, the wealth tax should be at the top of the list to help pay for these plans because of the huge amounts of revenue it would generate."

Warren said the ultra-rich and powerful have "rigged the rules in their favor," and said that the wealth of billionaires is 40% higher than before the coronavirus pandemic began.

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"As working families struggle to put food on the table, keep the heat on, and pay the rent during this devastating economic crisis that has caused the poverty rate to jump by the largest amount in at least 60 years, the rich have only gotten richer," Congresswoman Pramila Jayapal (D-WA-07) said in a statement.

A 2021 analysis from economists Emmanuel Saez and Gabriel Zucman from the University of California-Berkeley said that the tax would bring in at least $3 trillion in revenue to the U.S. over 10 years. Estimates say that the tax would impact about 100,000 families.

The plan proposes a 40% "exit rate" on the net worth of any U.S. citizen above $50 million who renounces their citizenship to avoid paying the tax. It also includes a $100 billion investment to rebuild and strengthen the IRS to support the proposed legislation.

Credit: AP
Sen. Elizabeth Warren, D-Mass., speaks during a news conference on Capitol Hill in Washington, Monday, March 1, 2021, to unveil a proposed Ultra-Millionaire Tax Act. (AP Photo/Susan Walsh)

However, there are a few challenges ahead to make this legislation a reality.

The Secretary of the U.S. Treasury Department Jenet Yellen said last week that she wasn't planning to support a wealth tax like Warren's because it's "something that has very difficult implementation problems," according to CNN.

Instead of a tax hike, on several occasions, Yellen and other Biden administration officials have discussed examining the corporate tax rate and loopholes, according to CBS News.  

Sen. Warren said in a statement that the taxes the U.S. receives could be invested into priorities of President Biden and Democrats in Congress, like child care, early education and infrastructure.

"I'm confident lawmakers will catch up to the overwhelming majority of Americans who are demanding more fairness, more change, and who believe it's time for a wealth tax," Warren said.

View the economists' analysis below: