Wealth Tax Calculator: Try Taxing the Super Rich
Sen. Elizabeth Warren (D-MA) recently proposed a wealth tax on the super-rich as a way to reduce wealth inequality. It is a simple 2% tax on wealth over $50 million and a 3% tax on wealth over $1 billion. Early polls suggest that his 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 make or spend money. But a wealth tax targets the huge fortunes held by the wealthy, whether in the form of stocks or a yacht.
UC Berkeley economist Emmanuel Saez, who advises Warren, estimates the tax will affect 75,000 households and raise $2.75 trillion over 10 years.
But Warren, who is running for president, is not the first Democrat to propose a wealth tax in recent years. In 2017, Senator Bernie Sanders offers a more modest wealth tax as an option to fund part of its Medicare-for-all plan. And we may see other 2020 candidates propose wealth taxes.
We’ve now created a Wealth Tax Calculator – a tool that lets you design your own wealth tax – based on a dataset 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.
Do your own wealth tax
The math behind the tool, explained
Matt Bruenig of the People’s Policy Project shared a dataset that shows the estimated wealth of Americans in 2016. He used the Consumer Finance Survey microdata, plus Forbes 400 2016. This dataset attempts to capture the wealth of each household in the United States.
From there, the tool checks whether a household would be subject to wealth tax and then taxes it accordingly.
We reviewed the Tax Policy Center Estimated cost over 10 years of Sanders’ free college proposal from the 2016 campaign and used the average annual cost; and the Columbia Center on Poverty and Social Policy estimate for the proposed Bennet-Brown Child Tax Credit. These estimates do not apply to 2016, when the wealth data comes from. So, in order to get an apples-to-apples comparison, we applied a 5.5% annual revenue increase, consistent with Congressional Budget Office standards.
One other note: We have not calculated how much wealth tax would pay for Medicare for All due to the wide range of cost estimates.
Correction: A previous version of this article said Sanders’ Medicare-for-All plan came from his 2016 presidential primary campaign, but his proposal is from 2017.