Sen. Bernie Sanders unveils 'Tax on Extreme Wealth' plan originally appeared on abcnews.go.com
Dubbed the "Tax on Extreme Wealth," Sanders' proposal aims to cut the wealth of billionaires in half over the next 15 years.
The Sanders campaign says the plan would bring about $4.35 trillion in the next decade. Tax revenue from the wealthy would be used to fund many of Sanders’ progressive policy proposals such as his affordable housing plan, universal childcare and aid in financing Medicare for All.
According to his campaign, if imposed, the tax would be bracketed starting with households with a net worth of $32 million, at rates between 1- 8%.
Under the plan, the IRS would be required to help enforce the tax, which includes auditing all billionaires and 30% of tax returns from the top 1% of wealth earners. It would also create an "exit tax" of 40% for millionaires and 60% for billionaires seeking to expatriate.
Sanders' plan is a direct attempt to redistribute the wealth of “millionaires and billionaires” he often opines about from the campaign trail. University of California, Berkeley economists Gabriel Zucman and Emanuel Saez analyzed the plan for the campaign and determined that it would “fully eliminate the gap between wealth growth for billionaires and wealth growth for the middle class.”
The pair also advised Massachusetts Sen. Elizabeth Warren on her similar “Ultra-Millionaire tax.” That plan would place a 2% marginal tax on net worth between $50 million-$1 billion and a 3% marginal tax on $1 billion plus.
“Will the wealthy do things that wealthy people can do to avoid paying the tax? That’s the real concern that I have,” Mark Zandi, a chief economist at Moody’s Analytics who has reviewed Warren’s plans as well as other presidential candidates’ plans, told the Washington Post. “A lot of other countries have tried this and backtracked because of tax avoidance issues.”
Zucman and Saez, however, said in their review that there are significant enforcement measures included. They also calculated potential revenue with the assumption that wealthy households would avoid 15% of the tax.
Warren's campaign estimates it would bring in $2.75 trillion over 10 years, $1.6 trillion less than Sanders' plan. There has been debate over whether Warrens' plan would yield the wealth redistribution it promises.
Other 2020 contenders have put forth their plans to combat income inequality.
Former Vice President Joe Biden has proposed returning tax rates to pre-Trump tax-cut levels for the wealthy and imposing a tax on capital gains. New Jersey Sen Cory Booker’s “Rise Credit” seeks to dramatically expand benefits from the Earned Income Tax Credit (EITC), which aims to support families with children who have lower incomes. Bookers' intent is to help reduce the poverty rate, provide a work incentive and put more money in the pockets of working and middle-class families.
Entrepreneur Andrew Yang’s “Freedom Dividend,” would provide all Americans 18 years or older with $1,000 per month and would be funded by a value-added tax.
California Sen. Kamala Harris unveiled the “Lift Act” in October 2018 to address the rising cost of living with a tax credit up to $6,000 a year, about $500 a month, for middle class and working families. The Tax Policy Center estimates that Harris’ plan would cut taxes by an average of about $3,200 of after-tax income in 2019.
ABC News' Adam Kelsey and Cheyenne Haslett contributed to this report.