The wealth tax, explained

Taxing the richest 0.1% of Americans

Economist Gabriel Zucman inspired the wealth tax plans of both Bernie Sanders and Elizabeth Warren. He explains how he thinks a wealth tax could work in an interview with Brut.

Income inequality in the U.S. is at a 50-year high and Zucman says the current tax system isn't helping

He tells Brut, “For many billionaires, they own a ton of wealth, while having very little taxable income. One simple example is Warren Buffett. He's worth, $60, $70 billion in wealth, but his taxable income is just $10, $20 million. That's true for Jeff Bezos as well, that's true for Mark Zuckerberg, that's true for the Google founders. All of them own billions in wealth and pay essentially zero in taxes today.” Sanders and Warren both say their wealth tax would affect only the richest 0.1% of Americans.

Critics say wealth taxes have been tried in Denmark, Sweden, France, and Switzerland unsuccessfully

Zucman explains, “European countries tolerate tax competition, which means that if you're a wealthy, French tax payer and you want to avoid a wealth tax, it's very easy, you simply move to Belgium, or you simply move to some country that doesn't have a wealth tax. And immediately you stop paying taxes in France.” Zucman says that taxing the rich is not a new idea in the U.S. “The U.S. is different because in the U.S. if you move outside of the U.S. and you're a citizen, the taxes follow you. And in both the Warren and the Sanders proposals, there is an exit tax at the time of citizen renunciation. So let's say if you're tempted to avoid a wealth tax, by renouncing your U.S. citizenship, you would have to pay 40% in the wealth tax proposal upfront. So, if your wealth is $100 billion, you would have to pay $40 billion.”, he concludes. In 2019, over 70% of Democrats and over 50% of Republicans said they support a wealth tax on the super-rich.

Brut.