As tax season comes into full swing, and the country grapples with how to move forward now that we’ve reached the debt ceiling, many people are bringing up the idea of “wealth taxes” or “millionaire taxes.”
Wealthy Millennials Not Banking on Stocks: What They’re Investing In
Read: Protect Your Financial Future With Gold and Silver
Flat Income Taxes: Who Are the Biggest Winners and Losers?
Both relate to a similar idea. As the Tax Foundation explained, “A wealth tax is imposed on an individual’s net wealth, or the market value of their total owned assets minus liabilities. A wealth tax can be narrowly or widely defined, and depending on the definition of wealth, the base for a wealth tax can vary.”
In the contemporary contextual case facing the U.S., most wealth taxes proposed are targeting high net worth individuals or corporations.
Who’s For a Wealth or Millionaire Tax?
Concerning those who are for the agenda, it is argued that further taxing the highest earners will ease the burden on middle class workers — and result in a healthier economy. As well, the added revenue could provide funding for educational programs, housing subsidies and child care for middle and working-class families, supporters claim.
As CBS News reported, Democrats like President Joe Biden, Sen. Elizabeth Warren and independent Sen. Bernie Sanders have been pushing for a national wealth tax for years. However, they have found little support in Congress (where Republicans are largely against tax increases). The Guardian reported that, at the recent World Economic Forum in Davos, there was talk of governments pushing wealth taxes to bridge the gap. But in America, with little traction on the federal level, many states have made attempts to take up the initiative.
Among them are Democratic-led territories like New York, Washington and California, as well as Connecticut, Hawaii, Illinois, Maryland and Minnesota. CBS reported that lawmakers from these states argued that “new wealth taxes are necessary because the quirks of the federal tax code allow multimillionaires and billionaires to avoid paying their fair share.”
In fact, CBS cited a recent Oxfam report that claimed the top 1% of earners in America have seen their net worth increase 19 times faster than the bottom half (economically speaking) of workers over the past 10 years.
California Congressman Alex Lee recently introduced a bill into the state legislature to create a 1.5% “extra annual tax” on anyone with a net worth more than $1 billion, to commence as early as 2024. Over time, the net worth threshold will drop to apply to those with a net worth of $50 million. If passed, the tax would also continue to apply to former California residents “even years after they left the state and moved elsewhere,” per Fox News.
While it might seem intuitive that wealthy individuals would be largely opposed to similar measures, there are a number of millionaires and billionaires that have said “tax us, the ultra-rich, now” — among them actor Mark Ruffalo and Disney heiress Abigail Disney, who were among 200 top earners that penned a letter for the Davos committee, as previously reported by GOBankingRates. In the letter, the signatories said they want to be taxed more in order to help those struggling with costs of living. This falls in line with the ideology stated by a group of wealthy Americans called the Patriotic Millionaires:
“We seek to reform our country’s political economy so that it naturally generates greater economic and political equality, the preconditions for a stable, prosperous nation,” the group said in a statement.
Take Our Poll: What Are Your Financial Priorities in 2023?
Tax Trends 2023: 3 Financial Moves To Get a Better Refund This Year
That perspective perhaps aligns with the views held by many Americans. According to CNBC, citing a 2020 Reuters poll, 64% of Americans — including 77% of Democrats and 53% of Republicans — agree with a wealth tax on the super-rich.
More From GOBankingRates