Bloomberg's 'tax on the very rich' isn't actually a wealth tax like the ones Warren and Sanders have proposed. Here's how they compare.
Billionaires have become central to the Democratic primary race — thanks to both their donations and their taxes. A wealth tax, like the ones proposed by presidential candidates Sen. Elizabeth Warren and Sen. Bernie Sanders, would make ultra-wealthy Americans pay the federal government a small percentage of their net worth each year. Former New York City Mayor Mike Bloomberg proposed a 'surtax' on ultra-wealthy Americans' income that would leave their net worth alone and would bring in much less revenue, but is more feasible than Warren and Sanders' plans. Despite popular support, any bill for a wealth tax would have to overcome opposition in both Houses of Congress, the White House, and the Supreme Court before becoming law. Visit Business Insider's homepage for more stories.
A majority of the American public, a group of ultra-wealthy Americans, and a handful of presidential candidates agree that the US needs a wealth tax to help close the growing wealth gap. But few people agree on how just how much that tax should be, or how it should be administered. Three Democratic presidential candidates, Sen. Elizabeth Warren, Sen. Bernie Sanders, and former New York City Mayor Mike Bloomberg, have released their own proposals on how to raise taxes on the ultra-wealthy, and questioned the other candidates' commitment to ending wealth inequality, because they have yet to do so. Before Sanders unveiled his plan in September, Warren's plan was the most commonly cited example of a radical wealth tax. Now, though, Sanders' "Tax on Extreme Wealth" makes Warren's "Ultra-Millionaire Tax" "look moderate," NPR's Greg Rosalsky wrote. Last week, Bloomberg released his own "New Tax on the Very Rich" proposal for an income-based tax on ultra-wealthy Americans. The catch is that Bloomberg's proposal isn't a tax on wealth at all; it's a surtax on income. Sanders and Warren both propose instituting a wealth tax, but their plans have some key differences.
As shown in the chart above, Sanders' plan proposes taxing Americans who have lower net worths than Warren's plan does. The endpoints of Sanders' tax brackets overlap, so for the purposes of this chart, Business Insider rounded to the nearest decimal based on standard tax policy. A married couple with a collective net worth above $32 million would have to pay a wealth tax under Sanders' plan, while couples worth less than $50 million would be exempt from Warren's tax. The richest Americans — those with a net worth above $10 billion — would also pay 8% in taxes more Sanders' plan, substantially more than the 3% proposed by Warren. The difference between the two plans is perhaps best illustrated by how much their respective authors say they would raise. Warren's campaign estimates that her wealth tax would raise $2.75 trillion in 10 years, while Sanders' campaign estimates that his tax would raise $4.35 trillion during the same time period. Bloomberg says he also wants to raise billionaires' taxes — but has a very different idea of how to do it. The former New York City mayor's tax plan includes raising the tax rate for the highest-earning Americans from 37% to 39.6%, according to his campaign website. That was the tax rate before Trump's unpopular Tax Cuts and Jobs Act took effect in 2018. Bloomberg also proposed adding an additional 5% "surtax" on incomes of more than $5 million a year, according to his campaign website. The former mayor's plan would likely be easier turn into law than Warren and Sanders' proposals since it is "essentially just adding a higher tax bracket," CBS News' Stephen Gandel reported. Bloomberg's proposal would also be significantly easier for the IRS to enforce since it would eliminate the need to appraise assets such as yachts and fine art. Any true wealth tax proposal would face substantial headwinds before becoming law, Business Insider reported. The constitutionality of such a tax would likely end up debated in front of the Supreme Court, according to former Department of Justice tax attorney James Mann, who is now a tax partner at law firm Greenspoon Marder. The revenue raised by a potential wealth tax would likely be much lower than its advocates expect because of tax evasion, Mann told Business Insider. Bloomberg's proposal does trade feasibility for earning potential, however. The "surtax" would net the federal government about $4 billion a year, or $40 billion over a decade, CBS News estimates. The billionaire says on his campaign website that he would spend the funds on rebuilding infrastructure, improving public education, and widening access to health care if elected, but he would have far less to work with than Warren's $2.75 trillion and Sanders' $4.35 trillion over the same time period. "Mike recognizes the urgent need to address economic inequality in the United States, and as your piece notes, a wealth tax faces significant challenges — and may not work," a spokesperson for Bloomberg's campaign said in a statement to Business Insider. "Mike's plans tackle worsening inequality immediately, using both existing and innovative tools." Bloomberg's proposal for a financial transaction tax would also raise more tax revenue from the wealthy, according to the spokesperson. Bloomberg himself would pay an additional $1.2 billion in taxes every year on his proposal, according to CBS News, but he could hold on to his existing $62 billion fortune tax-free. Wealth accumulation in the US would look a lot different under a wealth tax A study by The University of California at Berkeley's Emmanuel Saez and Gabriel Zucma, published in the Brookings Papers on Economic Activity, found that if a moderate wealth tax had been introduced in 1982, Jeff Bezos' fortune would be half what it was in 2018. Bill Gates, meanwhile, would be $61 billion less rich. While no such study has been done on Sanders' proposal, NPR's Greg Rosalsky reported that it "wouldn't just slow the growth of wealth at the top. It would essentially stop it."SEE ALSO: Here's how much money America's 10 wealthiest people would have if the US had a moderate wealth tax DON'T MISS: Mayor Pete's awkward embrace of billionaires isn't a moral disagreement with Bernie Sanders, it's a campaign strategy Join the conversation about this story » NOW WATCH: This animation shows how far your sneeze can actually travel
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Every leading candidate for the 2020 Democratic nomination is proposing trillions of dollars of new taxes...Every leading candidate for the 2020 Democratic nomination is proposing trillions of dollars of new taxes on wealthy Americans and businesses. The divide in the field is how high to go.
Elizabeth Warren bought a full-page ad in a GOP billionaire's newspaper so she could taunt him about the $2.3 billion he'd pay under year one of her wealth tax | Markets Insider
Warren bought a full-page ad in a newspaper that's owned by Sheldon Adelson, a Republican billionaire,...Warren bought a full-page ad in a newspaper that's owned by Sheldon Adelson, a Republican billionaire, and said he would pay $2.3 billion in the first year of her wealth tax. The taunt comes a day after the Democratic debate in Nevada, where Warren lambasted another billionaire on the stage, former New York City Mayor Mike Bloomberg. The Warren wealth tax would start with households that own $50 million worth of assets. Visit Business Insider's homepage for more stories. Sen. Elizabeth Warren bought a full-page ad in a newspaper owned by a prominent Republican billionaire and taunted him over how much he'd pay in the first year of her proposed wealth tax. The Massachussetts senator taunted Sheldon Adelson, the GOP megadonor and casino magnate, with the ad in Thursday's edition of the Las Vegas Review-Journal after the ninth Democratic primary debate. Only a day before, she tore into former New York City Mayor Mike Bloomberg, another billionaire, over his treatment of women, huge wealth and regulatory views. Jon Ralston of the Nevada Independent tweeted out an image of the advertisement, which printed Adelson's estimated net worth of $39.6 billion. It estimated that the casino owner would end up paying $2.3 billion in the wealth tax's first year, coming out to less than 6% of his wealth. The newspaper ad said that the wealth tax would be used to invest in childcare, student debt reduction, and additional funds for public school students in Nevada. Warren's signature proposal is a wealth tax on everything the richest Americans own. Her plan would kick in at $50 million with households paying a 2% annual tax on their assets like stocks, paintings, yachts, and homes. It would ramp up to 6% for households with fortunes over $1 billion. Presidential candidate Bernie Sanders also backs a similar plan, and both would substantially shrink the fortunes of billionaires. The Massachussetts senator had previously ripped into Adelson, a key Republican fundraiser in the 2016 election. She called him out in 2018 on a Japanese casino deal that the White House lobbied for and said it was emblematic of corruption. The 86-year-old billionaire is a close ally of the Trump administration, and he's expected to donate $100 million toward efforts to support the president's re-election as well as other GOP candidates, the Guardian reported.Join the conversation about this story » NOW WATCH: A law professor weighs in on how Trump could beat impeachment
Mike Bloomberg's new plan to crack down on Wall Street echoes those of Bernie Sanders and AOC | Markets Insider
Bloomberg rolled out a plan to crack down on Wall Street that mirrors proposals from Sanders...Bloomberg rolled out a plan to crack down on Wall Street that mirrors proposals from Sanders and AOC, notably the inclusion of a financial transactions tax. It calls for tougher oversight of the largest Wall Street banks and to strengthen consumer protection laws. It's a reversal from Bloomberg's past stance on financial regulation, as he warned Democrats against taking "punitive actions" on Wall Street that could harm the economy while serving as New York City mayor in 2010. Visit Business Insider's homepage for more stories. Democratic presidential candidate Mike Bloomberg on Tuesday unveiled his plan on crack down on Wall Street. It includes a financial transactions tax that also draws support from primary rival Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez of New York. The proposal called to reinstate stricter oversight for the biggest banks on Wall Street and to shore up consumer protection laws governing payday lending and financial advisers. It would also set up a special team within the Justice Department to investigate bankers and fight corporate crime. The former New York City mayor also seeks to merge Fannie Mae and Freddie Mac, the two government housing giants. "We need to make the financial system work for every American," Bloomberg said in a tweet about his proposal. He added that Trump has rolled back critical protections under the 2010 Dodd-Frank law designed to prevent another financial collapse. "I won't let him get away with it," the billionaire media executive said. The plan marks a reversal from Bloomberg's past stance on tougher regulations on Wall Street, the sector where he first amassed a $63 billion fortune selling financial data. While serving as New York City's mayor in 2010, Bloomberg urged Democrats against taking "punitive actions" that could harm US economic growth, Politico reported at the time. Four years later, he called Dodd-Frank a package of "stupid laws" that the financial sector learned to ignore. Read more: A Wall Street firm lists its 5 best hedges for an unusual coronavirus-driven market crash — and shares what to do if it's successfully contained The inclusion of a 0.1% financial transaction tax on every stock and bond traded echoes proposals from Sanders and Ocasio-Cortez, underscoring the Democratic Party's shift to the left in the decade since the 2008 financial crisis. The latter co-sponsored a House bill last year to slap the tax on securities transactions and curb high-frequency trading. Sen. Elizabeth Warren and former Mayor Pete Buttigieg also endorse the idea of a tax on Wall Street transactions. Still, Sanders has gone a lot further than Bloomberg, as the Vermont senator has proposed breaking up the biggest banks on Wall Street. Bloomberg's rise in the polls has encountered backlash from progressives arguing the self-funded billionaire is buying the election with his personal fortune. Recently, a string of resurfaced comments also caused trouble for the campaign. During a 2008 interview, Bloomberg linked the end of a discriminatory mortgage-lending practice targeting black Americans known as "redlining" as a cause of the financial crisis. Earlier this month, Bloomberg introduced a plan to raise $5 trillion in new tax revenue from the wealthiest Americans and corporations. It would partially roll back the Trump tax cuts and raise the top marginal tax rate on income.Join the conversation about this story » NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption