When it comes to taxing the assets of America’s wealthiest, Warren said, “it shouldn’t make a difference whether you have real estate, or whether you have cash, or whether you have a bazillion shares of Amazon.”
“Yes, Jeff Bezos, I’m looking at you,” she said.
Warren has repeatedly taken aim at billionaire Bezos over how much he pays in taxes. ProPublica recently revealed that Bezos reportedly did not pay income taxes for two years, and that he received a $4,000 tax credit in 2011 meant for families earning under $100,000.
Earlier this week, Warren tweeted that “the richest guy on Earth can launch himself into space while over half the country lives paycheck to paycheck, nearly 43 million are saddled with student debt, and child care costs force millions out of work. He can afford to pitch in so everyone else gets a chance.”
She also criticized his comments thanking every Amazon employee and customer for funding his foray, where Bezos said “you guys paid for all of this.”
“Jeff Bezos forgot to thank all the hardworking Americans who actually paid taxes to keep this country running while he and Amazon paid nothing,” Warren tweeted.
Amazon did not immediately respond to Insider’s request for comment.
Warren has repeatedly called for a wealth tax
Warren campaigned on a wealth tax in her failed 2020 presidential run, and continues to push for legislation that targets America’s highest earners.
Under her most recent proposal, the Ultra-Millionaire Tax Act, households with a net worth of $50 million or more would see at least a 2% tax on their assets. Those with over $1 billion would have a 3% tax – what Warren called a “tiny little tax” on CNBC.
“But notice, if we put that tiny little tax in place, that would be enough to pay for universal childcare, enough to pay for our kids to be able to go to college, enough for us to pay for all of those roads and bridges and bring them into the 21st century,” Warren said.
Wealth taxes, and taxes on high-earners, have recently claimed the spotlight amidst a push to fund President Joe Biden’s infrastructure package. While Biden did not propose an outright wealth tax, some of his measures would target America’s highest earners. He also proposed increasing IRS funding, which could raise an additional $700 billion over 10 years. Those proposals came after a study from IRS researchers and academics found the top 1% of Americans fail to report about a quarter of their income to the IRS.
Per an analysis from Americans for Tax Fairness and the Institute for Policy Studies Project on Inequality found that, Bezos would have ponied up $5.7 billion in taxes in 2020 under Warren’s wealth tax.
Yes, President Joe Biden wants to tax the wealthiest Americans. But he wouldn’t do it with a wealth tax.
It may seem like a small difference, but it’s a significant one. A wealth tax is an outright tax on someone’s net worth, while Biden is proposing changes to existing taxes.
Of course, there’s a famous example of a wealth tax from one of Biden’s rivals from the 2020 campaign: Sen. Elizabeth Warren’s Ultra-Millionaire Tax Act, which would levy additional taxes on those with a net worth of $50 million or more.
White House Press Secretary Jen Psaki broke it down at a March press briefing: “I know Sen. Warren has put forward a wealth tax, and the president shares her view that middle-class families are paying more than their fair share and those at the top are not doing their part, so certainly he has that shared objective,” before continuing, “He laid out during the campaign his own plans for fixing this, which are different from Sen. Warren’s.”
When he talks about raising taxes, Biden’s tone strikes notes of Warren and Sanders, saying hikes won’t impact the wealthiest’s standard of living or “deprive” them of their second or third homes, and he’s “sick and tired of ordinary people being fleeced.”
But he’s not legislating like Warren and leaning into an outright wealth tax (even though it’s consistently popular). Instead, he’s opting for more of a backdoor, with a series of complex reforms that may be more palatable to lawmakers. It shows the potential limitations of how far left Biden is willing to – or thinks he can – go.
Biden would raise the income tax rate to 39.6% for Americans earning over $400,000, and would increase the rate of tax on assets – called capital gains – to be in line with that 39.6% income tax, rather than the current lower rate of around 20%. He also wants to ramp up IRS enforcement on the ultrawealthy, who have been found to hide billions. He also wants to close up loopholes like the stepped-up basis, which can provide massive tax relief on inherited properties.
“While there may be some overlap in the people – the subset of the population – being hit by these tax hikes, the design is very different,” Garrett Watson, a senior policy analyst at the Tax Foundation, told Insider of the difference between the two plans. “One is hitting income, and the other is taxing the stock of wealth or someone’s net worth.”
The Biden White House hasn’t totally dismissed the idea of an outright wealth tax, but it hasn’t supported it, either. Treasury Secretary Janet Yellen cited implementation problems as one reason it would be difficult to execute, but never fully ruled it out.
How Biden’s proposal would impact the wealthy
That difference in design could actually have a disparate impact on the wealthiest Americans, according to David Gamage, a law professor at Indiana University who recently testified in front of Warren and a Senate Finance subcommittee on wealth taxes.
Biden’s proposal to hike the capital-gains rate would have a big impact on some of the very wealthy, Gamage told Insider. Specifically, he said, people like Wall Street financiers earn most of their income from capital gains (like selling off stocks increasing in value). That means they essentially pay half the tax rate on their income, unlike people drawing a straightforward salary.
But then there’s people like Elon Musk and Bill Gates and Warren Buffett.
“Most of their wealth or economic income is in the form of their stuff they own going up in value because of the things they’ve done, primarily stock,” Gamage said, “and until they sell that stock – which they’re never going to do, for the most part, because there’s ways around that – it wouldn’t be included in the tax space.”
Things like closing some potential loopholes, including the stepped-up basis, which taxes an inheritance on the value it’s inherited at – not value it gained while held by its prior owner – could potentially have a big impact on megamillionaires and billionaires, said Gamage.
But, according to Bill Smith, managing director for CBIZ MHM’s national tax office, said that getting through those loopholes adjustments could be paramount; he said it could be a “money-loser” if it just taxes capital gains alone, because people might hold off on selling them.
What it all means
If all of that sounds a bit confusing to you, you’re not alone.
Frank Clemente, president of Americans for Tax Fairness, noted that wealth taxes often poll well – and that could be because of how straightforward they are.
“I think that it does so well in polls because it’s easy to understand. It’s very clear. It does not hit people,” Clemente said. “If you’re assessing a wealth tax on $50 million, everybody knows they’re not at $50 million except for a very small slice of the population.” Clemente, a wealth tax advocate, said he wishes Biden had been a bit bolder in his proposals, but thinks he “calibrated his position to what he thinks he could get through Congress.”
However, that doesn’t mean talks of a wealth tax will simply just go away; Smith said he doesn’t think that we’re done with an either/or situation.
“I think the Biden proposals have a number of steps in the right direction, but we need more than what’s currently being proposed to really fix the deep flaws in the income tax,” Gamage said, noting that a proposal like Biden’s could work well in tandem with Warren’s wealth tax.
And what’s been proposed isn’t final yet. There’s a long road of negotiations over different economic packages and their funding ahead. It’ll be a hot tax summer, as politicians argue over how they’ll change and who will pay them. Currently, the top 1% of tax filers would shoulder the burden of proposed changes on individuals, paying $100,000 more annually.
“It’ll be interesting to see how this stuff moves through Congress,” Watson said.
For his part, Biden has vocally defended the tax measures laid out in his plans, emphasizing fairness and equity.
“This is about making the average multimillionaire pay just a fair share,” he said in one fiery address. “It’s not going to affect their standard of living a little bit.”
A one-off wealth tax on the wealthiest Argentinians brought in around $2.4 billion to help address pandemic costs, according to the Buenos Aires Times.
In December, Argentina’s Congress voted to pass a levy on those with assets over 200 million pesos, Insider’s Joshua Zitser reported. The measure passed by 42 to 26 votes, although it did see some intense political opposition. According to the BBC, the tax was only set to impact the top 0.8% of the population, and about 10,000 people ended up paying the tax, according to some early data. They saw a levy of up to 5.25% on their total assets.
Argentina’s wealthiest reportedly pushed back on the tax, with some moving to take legal action. Others procrastinated on paying; payments were due April 16, but the Buenos Aires Times reported that only 2% of taxpayers subject to the tax had paid up by early April.
The revenue raised will go toward areas impacted by the pandemic, like housing, scholarships, public health, and relief for small businesses. Overall, the amount that the taxes brought in comes to about 0.5% of the country’s GDP, according to the Buenos Aires Times. The newspaper reported this was a higher amount than expected.
As the subject of wealth taxes has gained steam internationally during the pandemic, critics have emerged, citing issues ranging from feasibility to even legality. Argentina’s example suggests their critiques could be wrong, and wealth taxes have viability.
One-off wealth taxes have emerged as a possible pandemic recovery solution
The International Monetary Fund has said that temporary taxes on the wealthy could help the global economy rebound from the coronavirus recession. That statement from the IMF marked a major shift from its own policies – and perhaps highlights the increased traction of one-off wealth taxes as a way to curb inequality and help economies rebound from pandemic devastation.
Experts in the UK also called for a one-off measure in December, saying it could bring in around 260 billion pounds. The Wealth Tax Commission was proposing a 1% tax on wealth over £500,000 for five years. One-off taxes do have some precedent in the UK, and potential taxes on wealth may still be looming across the pond.
On this side of the Atlantic, Sen. Elizabeth Warren has been an outspoken advocate for a straightforward wealth tax on Americans with a net worth of $50 million or more. Her proposal – which would be permanent – could bring in $1.4 trillion over 10 years. A majority of Americans support a wealth tax as a way to curb inequality.
One of the most prominent wealth-tax critics has been billionaire Leon Cooperman; he’s said that he doesn’t think a wealth tax is intelligent or legal. He’s also said the ultrawealthy would hide their assets. That’s an assertion that’s been echoed by inequality expert and Nobel Prize-winning economist Angus Deaton: He told Bloomberg that a wealth tax would be difficult to implement, and the wealthy would try to avoid it.
President Joe Biden seems to be opting for taxes that target the wealthy, but don’t necessarily constitute a wealth tax. He’s proposed, among other measures, raising the income tax rate for Americans making over $400,000, upping the tax rates on capital gains, and increasing the corporate tax rate.
“It’s time for corporate America and the wealthiest 1% of Americans to just begin to pay their fair share,” Biden said in his address to the joint session of Congress.
Sen. Elizabeth Warren’s invitation to testify at a Senate Finance subcommittee has been rejected by one of her outspoken critics, billionaire Leon Cooperman.
On Monday, Warren invited Cooperman to testify at her hearing, called “Creating Opportunity Through a Fairer Tax System.”
“This hearing is an opportunity to share your views on how to strengthen the nation’s tax system to address economic inequality, raise revenues to fund critical pro-growth investments in families and communities, and bolster our long-term fiscal and economic outlooks,” Warren wrote in her invitation to Cooperman, which was viewed by Insider.
She gave him until Thursday, April 22 to respond; it seems as though he got back to her early, according to CNBC, which first reported on the invitation and Cooperman’s response.
Cooperman has turned down the invitation. In a response viewed by Insider, he wrote: “I find Senator Warren’s invitation self-serving and disingenuous.”
He also noted his continued support for a progressive income tax, and said that Congress should also look into eliminating some tax loopholes.
Cooperman added: “Most importantly, Congress should start examining in earnest how to fund progressive programs through revenue-neutral proposals that would cull bureaucratic waste rather than add further to administrative bloat – again, essential but boring, so not something of interest to most progressive politicians like Senator Warren.”
The two have a long history of vigorous back-and-forth on the wealth tax, a key proposal of Warren’s that she’s continually advocated for – and which Cooperman has continually derided. Their dialogue has included everything from a tweet from Warren asking Cooperman to “pitch in a bit more,” a five-page letter by Cooperman in response, and the inclusion of Cooperman’s position in one of Warren’s presidential campaign ads.
In her invitation, Warren wrote: “The opportunity will allow you to fully air your views, not merely in front of the financial news audience where you often express them, but before the entirety of the American people.”
Warren wants a wealth tax to help tackle inequality
Warren has called for a wealth tax as one measure to help address inequality, which has grown during the pandemic. An analysis from economists Emmanuel Saez and Gabriel Zucman found that Warren’s proposed tax could raise at least $3 trillion over the next 10 years; according to one study, it would have brought in $114 billion from billionaires alone in 2020.
A wealth tax is also a popular measure among voters, with a recent poll from Hill-HarrisX finding that the majority of respondents see a wealth tax as a way to address inequality.
“Instead of just complaining on TV, I invited Leon Cooperman to come to the Senate to make his case for why billionaires like him shouldn’t pay a wealth tax,” Warren said in a tweet after Cooperman declined her invitation. “We should have a public discussion on our rigged tax system. I’ll still use the hearing to do that.”
As for Cooperman? He may have declined the invitation, but “I will, however, be sure to tune in for the show.”
Sen. Elizabeth Warren has extended an invitation to one of her most vocal critics to debate her marquee policy, the wealth tax, on Capitol Hill.
On Monday, Warren invited billionaire Leon Cooperman to testify at a hearing for the Senate Finance Committee’s Subcommittee on Fiscal Responsibility and Economic Growth, which Warren chairs, first reported by CNBC. The hearing’s topic: “Creating Opportunity Through a Fairer Tax System.”
Cooperman’s perspective: The rich would hide their assets from a wealth tax
In March, Cooperman told CNBC: “If the wealth tax passes, go out and buy yourself some gold because people are going to rush to find ways of hiding their wealth.” This remark was in reference to his previous assertion that people would utilize gold as an asset for hiding their wealth.
He said that a wealth tax is “foolish,” has “no merit,” and that there are other, better ways to raise revenue, with eliminating waste as the best option.
“I don’t think it’s intelligent. I don’t think it’s legal,” he told CNBC of the wealth tax at the time.
Implementation issues – and whether the wealthy would simply dodge a wealth tax – have emerged as the two most prominent criticisms of Warren’s plan. Treasury Secretary Janet Yellen has previously cited the difficulty of implementing such a tax, although the Biden administration hasn’t explicitly ruled it out. A recent study from IRS researchers and economists found that the top 1% of Americans fail to report about 21% of their income. Over $1 trillion a year in taxes may be going uncollected, according to IRS Commissioner Charles Rettig.
Warren’s perspective: A wealth tax could help address inequality, and raise trillions
Warren campaigned on a wealth tax in the 2020 presidential campaign, and has continued to advocate for it as one measure to help address growing inequality during the pandemic. Her Ultra-Millionaire Tax Act could raise at least $3 trillion in the next 10 years, according to an analysis from economists Emmanuel Saez and Gabriel Zucman.
If the wealth tax had been implemented in 2020, it would have raised $114 billion from billionaires, according to an analysis from Americans for Tax Fairness (ATF) and the Institute for Policy Studies (IPS). Over the last 13 months alone, American billionaires have added $1.62 trillion to their collective net worths, according to a report from ATF/IPS.
A wealth tax is also a popular measure among Americans: A recent poll from Hill-HarrisX found that over half of Americans see a wealth tax as a way to address inequality. Wealth taxes have also gained traction internationally, with the International Monetary Fund saying one-off measures could help support economic recovery.
Now, the two may discuss their views at a Congressional hearing
Warren invited Cooperman to testify on this legislation at the April 27 hearing; and she asked him to RSVP by April 22.
“This hearing is an opportunity to share your views on how to strengthen the nation’s tax system to address economic inequality, raise revenues to fund critical pro-growth investments in families and communities, and bolster our long-term fiscal and economic outlooks,” she wrote in her invitation, which was viewed by Insider.
In a statement to CNBC, Cooperman said that he was “trying to determine whether she’s being objective or whether she’s just trying to promote her own agenda.” He added: “I’m a bit suspicious given how she never responded to the letter I sent her before.” Cooperman did not immediately respond to Insider’s request for comment.
In her invitation, Warren said that, “as we move expeditiously toward consideration of changes to our rigged tax code so that the wealthy pay their fair share, I believe you should be afforded the chance to present your perspective directly to Congress.”
She added: “The opportunity will allow you to fully air your views, not merely in front of the financial news audience where you often express them, but before the entirety of the American people.”
Growing wealth inequality has been exacerbated by the pandemic, as the global middle class shrinks and millions fall into poverty. One question has lingered: What can be done to address both the economic scars of the pandemic, and the inequality that’s grown alongside them?
It’s a measure that could also be popular with voters. A new poll from Hill-HarrisX of 2,813 registered voters asked respondents, “Which comes closest to your view about the wealth tax proposed by Democrats for individuals with a net worth over $50 million?”
Of those respondents, 56% found wealth inequality to be a “significant problem facing the country,” with billionaires paying a wealth tax part of the solution. Conversely, 44% of respondents considered it unfair to impose an additional tax on people who already pay income taxes because because that would become “a penalty for being rich.”
There was a particularly stark partisan divide, as The Hill notes: 77% of Democrats answered that a wealth tax was part of the solution, compared to 35% of Republicans.
The current state of taxes in the US
Warren wants to tax the ultrawealthy, and campaigned on it during her 2020 presidential run. Her Ultra-Millionaire Tax Act targets households with net worths exceeding $50 million, proposing a 2% tax on those with a net worth between $50 million and $1 billion, and a 3% tax on those with over $1 billion.
She’s not the only politician looking to change up how American taxes work: Sen. Bernie Sanders, another wealth tax supporter, has introduced two pieces of legislation targeting the wealthy and corporation by reforming the estate tax and corporate tax.
Meanwhile, President Joe Biden, who hasn’t explicitly backed a wealth tax, wants to hike taxes on corporations and American households making over $400,000.
Biden’s corporate tax hike is meant to finance his recently proposed American Jobs Plan. A Morning Consult/Politico poll found that 57% of voters said they would be more likely to support a $3 trillion plan funded by tax increases on Americans making over $400,000, compared to 47% of voters who said that they’d be more likely to support a $3 trillion funded by a corporate tax increase.
A recent study from IRS researchers and economists found that the wealthiest Americans may not even be paying the full amount of taxes they owe, with the top 1% of Americans not reporting about 21% of their income. At a Senate Finance Committee hearing last week, IRS Commissioner Charles Rettig said that that over $1 trillion in taxes could be going uncollected every year.
Over the last 13 months, American billionaires added $1.62 trillion to their wealth – a 55% increase.
This was a finding in the latest report from the left-leaning Institute for Policy Studies (IPS) and Americans for Tax Fairness (ATF). Both groups have tracked billionaire gains throughout the coronavirus pandemic, which has seen a K-shaped economic recovery for Americans: High-income workers have seen their jobs and pay grow, while low-wage workers have experienced the opposite.
“Billionaires’ huge pandemic-era wealth growth comes on top of a 19-fold increase in billionaire wealth over 31 years-from an inflation-adjusted $240 billion in 1990 to $4.56 trillion in 2021,” the report said. The report used data from Forbes to track billionaire gains from March 18, 2020 through April 12, 2021.
The number of billionaires has also grown, going from 66 in 1990 to 719 today.
“The concern is that we sort of further entrench the inequalities that we came into the pandemic with, meaning the number of households that are economically precarious grows,” Chuck Collins, director of the Program on Inequality at IPS, told Insider.
He said the “concentration” or “pooling” of wealth among billionaires has also accelerated.
“That’s the reality: We’re going to come out of the pandemic another degree of more unequal,” he said.
In the fourth quarter of 2020, the bottom 50% of Americans held $2.49 trillion in total household wealth. Meanwhile, the top 1% added about $4 trillion to their wealth during that time – more than the bottom 50% holds in total.
To offset the inequality that’s arisen during the pandemic, Collins recommends a combination of supporting frontline workers, lifting up the wage floor, and taxing the rich over the next six months.
If nothing is done, Collins said, that economic precarity could grow. He predicts that homeownership could decrease, as economic vulnerability – and the lack of savings – rises.
Additional taxes on the wealthy have become a hot-button topic during the pandemic. The International Monetary Fund has said that one-off taxes on the wealthy and corporations could help with coronavirus recovery; however, not everyone agrees, with Nobel Prize-winning inequality economist Angus Deaton saying the wealthy would find a way to dodge a tax. IRS Commissioner Charles Rettig also just said that $1 trillion or more in taxes could be going uncollected every year.
President Joe Biden has proposed a hike in the corporate tax to fund his infrastructure package, and has said that Americans earning over $400,000 could see a tax increase. In a speech defending the tax increase, he said that he was “sick and tired of ordinary people being fleeced.”
Collins said he thinks Biden has about two years to enact change and start making a meaningful difference in people’s lives.
“There’s a possibility of totally turning the course here,” Collins said. “But it is going to require some courage and boldness and spine, but I actually think the broader public is with the president on this.”
From March 18, 2020, to March 18, 2021, the world’s billionaires added $4 trillion to their wealth, according to a new report from the left-leaning Institute for Policy Studies (IPS).
That’s a 54% increase for the world’s 2,365 billionaires, who now have $12.39 trillion. The wealthiest 20 billionaires alone added $742 billion to their collective wealth during a pandemic – a 68% increase.
A January Oxfam report, which tracked global billionaire gains through December 31, 2020, found that the world’s billionaires had added $3.9 trillion to their wealth during the pandemic – an increase that could pay for the entire world’s vaccinations and prevent anyone from falling into poverty. That report found that recovery for people at the bottom could take up to a decade, with 200 million to 500 million people falling into poverty in 2020.
Now, according to the IPS report, which analyzes data from Forbes, Bloomberg, and Wealth-X, those billionaire gains have grown.
Renewed calls for a wealth tax
One of the Oxfam report’s possible solutions for creating a “better world” was imposing a wealth tax.
The IPS report found that American billionaires account for less than a third of that total wealth. But a wealth tax like the one proposed by Sen. Elizabeth Warren – where households with a net worth of over $50 million would see a 2% tax, and those with over $3 billion would see a 3% tax – would still raise $120 billion per year, according to the report.
From the end of 2019 to the end of 2020, the top 1% of Americans added just about $4 trillion to their wealth, while the bottom 50% held just $2.49 trillion in total household wealth by the end of 2020.
However, a wealth tax may still be a ways off in the US. President Joe Biden’s new infrastructure package is paired with an accompanying tax hike. But that increase would only target corporations, raising the corporate tax from 21% to 28%, and seek to enact a global minimum tax rate of 21%. It leaves wealth individuals alone, for now, although Biden’s administration has said it wants to tax households making $400,000 a year and up.
“I’m open to other ideas, so long as they do not impose any tax increase on people making less than $400,000,” Biden said in his speech introducing the package.
Chuck Collins knows how rich people hide their money.
Collins was an heir to the Oscar Mayer wiener fortune, an inheritance that he gave away completely. But that meant he learned firsthand how the wealthy (even the very charitable) hold onto their fortunes. It’s one thing to give up your income, he learned, and another to compromise the principal – and deprive future generations of accrued wealth – completely.
He opted to give it all away. Today, he’s the director of the program on inequality and the common good at the Institute for Policy Studies, where he delves deep into billionaire gains, income inequality, and how the ultrawealthy dodge taxes in America.
The situation is likely worse than widely appreciated. Recent research found that America’s highest earners may have been hiding billions from the IRS – far more than assumed. In fact, the report found that the top 1% of Americans don’t report 21% of their income, and the figure might be twice as high for the top 0.1%. That research comes from the government itself in the form of the Internal Revenue Service (IRS), along with academic economists.
Sen. Bernie Sanders has introduced legislation that would increase taxes and cut loopholes, and The Wall Street Journal reported that Biden is looking into beefing up the IRS. (Sanders wrote a blurb fo Collins’ book.)
In his upcoming book, “The Wealth Hoarders,” Collins dives into what he calls the Wealth Defense Industry: The army of tax attorneys, family offices, accountants, and more who are devoted to protecting clients’ wealth – and circumventing taxes. His thesis implies that this industry is an inevitable outgrowth of financialization, in which the financial sector grows out of proportion to the rest of the economy. But he argues it’s not too late to reverse it.
Ahead of its publication, Insider spoke to Collins about his own history, the book, and what needs to come next.
The current state of the ‘Wealth Defense Industry’
Collins writes that the Wealth Defense Industry has “mushroomed” in size since his first introduction to it in 1983. For instance, there are now over 10,000 family offices worldwide, he writes.
Collins said that legislation like that introduced by Sanders, Biden’s election, and the blue wave of the 2020 election, led wealth advisors to urge clients to move their money into “new forms” that would be more difficult for tax collectors to find.
“I feel like we’re kind of in a moment where this industry has been growing and growing and accelerating really in the last 15 years – the number of family offices, the number of planners, the number of dynasty trusts,” Collins said. “And it’s reaching this pinnacle moment because, for the first time in a long time, there’s a meaningful discussion about taxing the very wealthy.”
What ordinary people may not understand about how wealth is hidden
Collins told Insider that there’s an outdated image of wealth hiding, where it’s all stored offshore. But the US is the number two destination for “global kleptocratic capital.” Instead of storing money offshore, he said, the wealthy can turn to places like South Dakota, Wyoming, or Delaware.
“The thing I think we don’t understand is we are now the tax haven,” Collins said.
In the book, Collins details the myriad, complex systems that the so-called “Wealth Defense Industry” uses to obscure money. One is “artports,” or art-storage facilities that could be in your neighborhood, full of incredibly valuable paintings.
While one of those facilities could be mere blocks away from you, these ports are technically in Free Trade Zones, and the art never actually enters US commerce.
Or take, for instance, those brand-new glass towers in your downtown, where the wealthy could be parking their wealth by buying up units. Collins uses the Millennium Tower in Boston as an example. Those empty apartments, with their panoramic views, function as “wealth storage units” – and, Collins writes, over 35% of the units there are owned by shell companies and trusts.
On his own decision to give up his wealth, and the pressure that the wealthy face
“I would say the overwhelming cultural message for someone growing up in my class was ‘protect and preserve. You can do quirky things with your income, but don’t touch the corpus. Don’t touch the asset, let it just keep growing,'” Collins said.
For him to think differently meant going up against the “whole universe of wealth management” – and others in his position face an industry that has a self-interest in holding onto their assets and growing them. But Collins contends that there’s a certain point where people don’t need to keep accumulating or stockpiling wealth.
“There’s probably people out there that fundamentally think that they should pay more taxes, but their advisors, just it’s unthinkable, right?” Collins said. He said that there’s a whole culture surrounding the urge to utilize every possible tool and loophole to reduce taxes.
But there’s momentum for change
Collins said he thinks the “reform train” is moving, pointing to potential tax increases being put forward by the Biden administration. But even with new laws, he said, the agenda could be undermined by the Wealth Defense Industry, which underscores the need to shut down this hidden wealth system and close up loopholes.
“it’s like we’ve had a wild party at this restaurant, and now the billionaires are going to slip out the kitchen door before the bill comes,” Collins said. “And we basically have to say, ‘Nope, everybody has to stay and we need you all to chip in from the bill here.'”
He later added: “This is totally fixable. Start with enforcement, outlaw the bad trusts, increase transparency in reporting and disclosure, and then join with our global partners to clean up the global system. We could reverse it in 10 years.”
President Joe Biden is getting even more serious about raising taxes on the wealthy, according to a new Bloomberg report. It likely won’t look like a “wealth tax,” though.
Biden hasn’t said he’d enact a wealth tax like the one proposed by Sen. Elizabeth Warren, and instead he’s reportedly considering alterations to the tax code that would increase taxes on high earners without creating a brand-new tax that targets wealth.
Now, the deputy director of the National Economic Council, David Kamin has told Bloomberg what other tax changes are currently under discussion. One is eliminating the stepped-up basis, something that Treasury Secretary Janet Yellen has already been eyeing.
That measure has to do with inheritance, and how inherited assets are valued for tax purposes. Current law lets assets that have gained value since they were originally acquired be valued at their market price and only taxed on increase from the value at the time of inheritance – not any of the prior gains.
Also under consideration, according to Bloomberg, is increasing the tax rate on capital gains, taxing them at the same rate as the income tax.
Capital gains – profits made from selling assets like stocks – are taxed differently from income once the owner has had the asset for over a year. The rates for those gains are generally lower than the income tax. Throughout his presidency, Donald Trump mostly weighed even more cuts to capital-gains tax rates. Biden’s proposal could bring the rates up to 39% for those making the most money, a far cry from rates that currently come to around 20%. Also, wealthier Americans are exactly the type of people likelier to own assets that can be sold for a capital gain.
Finally, Biden wants to raise taxes on business.
Yellen is working toward creating a global minimum corporate tax rate, under the idea that if the US can convince most other countries to set the corporate tax rate at a certain level, Biden can raise corporate taxes without fear of multinationals leaving the country.
Growing disparity has underscored the push for a tax increase
According to Bloomberg, the “administration’s intentions” have been reinforced by the K-shaped recovery taking place throughout the pandemic in which high-income Americans have seen their jobs and wages grow, while low-income Americans experience the opposite. Biden himself used the term during a 2020 presidential debate.
Biden’s $1.9 trillion stimulus did offer some relief – and increased consumer confidence – for low-income Americans. That package was passed through reconciliation, which seems to be the most likely route forward for any Democratic tax hikes.
Tax increases – and what the wealthy are (or aren’t) paying – have been a hot topic
A new report found that the top 1% of Americans are avoiding taxes more than anticipated; they’ve been failing to report about 21% of their income.
There’s also been a more targeted push by progressives to introduce a new tax on wealth. Warren introduced a new bill that would increase taxes on the top 0.05% of households. If the measure had been in place in 2020, it would have raised $114 billion from billionaires alone.
In an interview with Bloomberg, Warren praised the American Rescue Plan and Biden’s continual advocacy for it. “There is momentum now for real change, and tax policy is a critical part of that change,” she told Bloomberg.
Warren also recently Sen. Bernie Sanders and other progressive Democrats in introducing a bill that would target corporations where CEOs are at least 50 times more than the median worker. That bill could raise up to $150 billion in 10 years.