It is no secret that “tax the rich,” is the clarion cry of Vermont Senator Bernie Sanders, but his new plan seems a bit much, even for him. The latest proposal by the self-proclaimed “democratic socialist” candidate for president, calls for a tax of nearly 100% of a billionaire’s income!
Two economists at the University of California, Berkeley claim that billionaires could face a 97.5% average effective tax rate under Bernie’s plan.
Emmanuel Saez, one of the professors, told Bloomberg that “with the wealth tax, you get directly at the stock instead of hitting the flow of income, making it a much more powerful de-concentration tool than income taxes.” The report pointed out that Sanders has said that the number of billionaires in the U.S. would be cut in half within 15 years under the plan.
The plan unveiled by Sanders seeks a 1 percent “wealth tax” levied on households worth more than $32 million and proposes tax rates that would increase for wealthier people, up to 8 percent for fortunes in excess of $10 billion.
Sanders vowed to go further than Sen. Elizabeth Warren and generate more than $4 trillion over the next decade, substantially reducing the national debt, as well as billionaires’ fortunes. Billionaires would face a 62 percent average effective tax rate under Warren.
Sanders’ plan goes further because it starts on fortunes worth less, kicking in at $32 million. Warren also proposes increasing the wealth tax up to 3 percent on any net worth of more than $1 billion, while Sanders’ tax rates don’t top out until 8 percent for the richest households.
When expressed in the single digits, those rates do not sound like much, and resonate with voters who want to see the wealthiest pay their fair share. However, as the economists point out, the way in which the “wealth tax” is levied, those seemingly small percentages, amount to average tax rates on the wealthy, of anywhere from 65 to almost over 95%.
How can that be fair to anybody?