The Moment The Super Rich Dreaded: Elizabeth Warren To Introduce Wealth Tax On Fortunes Above $50M

Sen. Elizabeth Warren, D-Mass., may not have made it to the White House despite her "two-cent tax" proposal but she now is finally getting the chance to make good on one of her campaign trail promises— aggressively taxing the super-rich. Warren is set to join the Senate Finance Committee, a position that will enable her to influence what is also one of President Joe Biden's key priorities: raising taxes on corporations and wealthy Americans to pay for infrastructure and pandemic recovery plans.

Warren, who thrilled massive crowds with a clear articulation of her solutions for complex problems like student loan debt and Medicare on the campaign trail last year, tweeted Tuesday that her first order of business on the Senate Finance Committee will be to introduce legislation for a Wealth Tax on fortunes above $50 million.

Warren's proposal, known as the ultra-millionaire tax, seeks to tax accumulated assets owned by rich Americans, as opposed to taxes on income and payrolls.

The idea behind the proposals is that with the current inequality, taxing only income and not wealth makes no sense. The rising anger at the inequality had fuelled the rise of the Progressives in the Democratic party, giving Warren more leverage in using the tax system to level the playing field among the wealthy and the middle classes.

The senator is expected to file legislation reflecting those campaign trail proposals, reports said. Those proposals called to impose a 2% tax on every dollar of net worth above $50 million, known as the two-cent tax, and a 6% additional surtax on every dollar of net worth above $1 billion. It was not immediately clear how much the surtax would be in the pending proposals. Based on the original campaign proposals, the tax would have brought in an estimated $3.75 trillion in revenue over a decade.

The top 1% of the U.S. population now holds nearly a third of U.S. household wealth now, up from nearly a quarter of all wealth 30 years ago, Federal Reserve data show. And the bottom 50% of people now hold just 1.9% of the wealth, down from an already low 3.7% in 1989. Warren's proposals would have affected only 75,000 families in the U.S.

In a poll by the New York Times and Survey Monkey, two-thirds of Americans approved Warren's wealth tax proposal, which was also — unsurprisingly — opposed by billionaires like Bill Gates, Charles Schwab, Jamie Dimon and Leon Cooperman.

Gates, the third richest person in the world as of January 2021, with an estimated wealth of $163 billion, had said those proposals would stifle business innovation in America.

"I'm all for super-progressive tax systems," Gates said at the New York Times DealBook conference in New York in November 2019. "I've paid over $10bn in taxes. I've paid more than anyone in taxes. If I had to pay $20bn, it's fine.

"But when you say I should pay $100bn, then I'm starting to do a little math about what I have leftover. Sorry, I'm just kidding," he added.

"So you really want the incentive system to be there and you can go a long way without threatening that."

But those aggressive tax proposals and the chanting crowds failed to see Warren through the primaries as support consolidated for centrist Democrats among voters. Former Texas congressman Beto O’Rourke had called her proposals and rhetoric "punitive."

President Biden's tax plan released before the elections proposed raising taxes on individuals with income above $400,000, including raising individual income, capital gains and payroll taxes. He also proposed raising the corporate income tax rate and imposing a corporate minimum book tax.

Warren, a longtime critic of the system, has often said it is "skewed in favor of big banks, lobbyists and other well-heeled interests."

In a statement, the Massachusetts senator said she'll continue to fight on behalf of working families and press giant corporations, the wealthy, and the "well-connected to finally pay their fair share in taxes." She also looks forward to becoming a "progressive voice at the table to secure meaningful relief and lasting economic security for struggling families."