Build your own wealth tax: try your hand at taxing the superrich
Elizabeth Warren made her pitch to tax massive fortunes. Now it’s your turn.
Sen. Elizabeth Warren (D-MA) recently proposed a wealth tax on the very rich as a way to curb wealth inequality. It’s a simple 2 percent tax on fortunes over $50 million, and a 3 percent tax on fortunes over $1 billion. Early polls suggest her proposal is very popular.
A wealth tax is different from most other taxes we pay. Usually, the government only taxes us when money changes hands — when we earn or spend money. But a wealth tax targets the huge fortunes that sit in wealthy people’s possession, whether it’s in the form of stocks or a yacht.
UC Berkeley economist Emmanuel Saez, who is advising Warren, estimates that the tax will hit 75,000 households and raise $2.75 trillion over a 10-year period.
But Warren, who is running for president, isn’t the first Democrat to propose a wealth tax in recent years. During the 2016 Democratic primaries, Sen. Bernie Sanders proposed a more modest wealth tax as an option for financing part of his Medicare-for-all plan. And we might see other 2020 candidates propose wealth taxes.
Now we’ve created a wealth tax calculator — a tool that lets you design your own wealth tax — based on a data set estimating the wealth of Americans in 2016 from the People’s Policy Project. You can see how much revenue it generates and what programs it could pay for.
Make your own wealth tax
The math behind the tool, explained
Matt Bruenig of the People’s Policy Project shared a data set that shows the estimated wealth of Americans in 2016. He used the Survey of Consumer Finances microdata, plus the 2016 Forbes 400. That data set tries to capture the wealth of every household in the US.
From there, the tool checks whether a household would be subject to the wealth tax, and then taxes them accordingly.
We looked at the Tax Policy Center’s 10-year estimated cost of Sanders’s free college proposal from the 2016 campaign and used the average annual cost; and the Columbia Center on Poverty and Social Policy’s estimate for the Bennet-Brown child tax credit proposal. These estimates aren’t for 2016, which is when the wealth data is from. So in order to get an apples-to-apples comparison, we applied a 5.5 percent annual increase in revenue, in line with Congressional Budget Office norms.
One other note: We did not calculate how much the wealth tax would pay for Medicare-for-all because of the wide range of cost estimates.