We Need to Tax the Billionaires Right Now

Billionaire Elon Musk, founder of Tesla and currently the world's richest person with an estimated fortune of $220 billion, pictured in 2020. (Photo: Patrick Pleul/dpa-Zentralbild/ZB)

We Need to Tax the Billionaires Right Now

This moment may not last, so we must act fast to make sure these outrageously wealthy individuals and families pay their fair share.

We are in a historic (and potentially very brief!) political moment when progressives have a real shot at winning a path-breaking tax on the nation's super-wealthy.

"The 400 wealthiest U.S. billionaires paid an average income tax rate of just 8 percent between 2010 and 2018, much lower than most teachers and firefighters."

Just over the past week, a billionaire wealth tax proposal has suddenly moved from the edge to the very center of the negotiating table for President Biden's sweeping Build Back Better agenda.

What explains the shift? The reasons are both negative and positive.

On the negative side: Kyrsten Sinema.

Last week, the Arizona Senator took a break from high-roller fundraising to inform her colleagues that she opposes even partially undoing the tax rate cuts on corporations and wealthy individuals that Republicans enacted (and she voted against) in 2017. This sent Democrats scrambling for new revenue sources, and Senator Elizabeth Warren and others are sounding optimistic that Sinema might be open to a billionaire tax.

Again on the negative side: pandemic profiteering.

U.S. billionaires have run wild during the crisis, making themselves nearly impossible to defend. Since March 2020, their combined wealth has ballooned by over $2.1 trillion, a gain of 70 percent, according to research by Americans for Tax Fairness and the Institute for Policy Studies. And instead of deploying their fortunes for good on this planet, billionaires have captured headlines with their outer space adventures.

In the positive side: activists taking on the billionaire class.

Many groups that once focused exclusively on poverty are now tackling the top end of the inequality problem and demanding that the rich pay their fair share of expanded child tax credits, universal pre-K, affordable home care, and the many other vital investments in the Build Back Better plan.

Poor People's Campaign Co-Chair Rev. William J. Barber II, for example, recently excoriated Senator Joe Manchin for denigrating proposed education and health care investments for low-income Americans as wasteful "entitlements" while "treating billionaires like they have the entitlement to make $2 trillion during the pandemic."

Again on the positive side: explosive investigative research.

An avalanche of new data underscores the need for a tax crackdown on the ultra-wealthy. A new Bloomberg blockbuster shows how Nike founder Phil Knight's tax games have shrunk his IRS bills by the billions. ProPublica revealed earlier this year that America's two richest men -- Jeff Bezos and Elon Musk -- have paid zero in federal income taxes some years. And White House economists recently reported that the 400 wealthiest U.S. billionaires paid an average income tax rate of just 8 percent between 2010 and 2018, much lower than most teachers and firefighters.

So how would a billionaire wealth tax work?

Senate Finance Chair Ron Wyden is expected to release the details shortly, but we know that his plan makes billionaires pay annual taxes on their increased wealth. This is key, since the ultra-rich get the vast bulk of their money from investments rather than from paychecks like most of the rest of us.

The tax is expected to target people with $1 billion in assets or more than $100 million in income three years in a row. Every year the tiny fraction of Americans in this elite group would pay a tax on the increase in value of stock and other tradable financial assets. They would owe a tax on gains from real estate and other less liquid assets when they sell them, along with annual interest fees.

The proposal could raise hundreds of billions of dollars over a decade but not enough to cover the full Build Back Better plan. Given our country's many pressing needs, we must keep up the heat on conservative Democrats to embrace a full fair tax toolbox. These should include raising top income and corporate tax rates, closing loopholes, and other innovative reforms on the table, such as a surtax on mega-millionaires and excise taxes to discourage excessive CEO pay and wasteful corporate stock buybacks.

But the billionaire wealth tax merits an extra push since it is the most powerful tool on the table for tackling the wealthy inequality that is undermining our economy and threatening our democracy. Americans for Tax Fairness has set up a handy one-stop site with billionaire tax fact sheets, polling, and other action tools.

Democratic leaders are saying that such a tax is "likely" to be in the Build Back Better legislation. But lobbyists for the ultra-rich will be fighting to whack it out before the final votes, which could come as soon as this week.

The window is narrow. But it is open.

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