- The idea of a wealth tax is gaining steam as a way to address economic inequality and recovery.
- The majority of respondents in a new poll see a wealth tax as one way to address inequality.
- The IRS chief told Congress it’s possible that over $1 trillion in taxes go uncollected each year.
- See more stories on Insider’s business page.
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?
For some, including Sen. Elizabeth Warren, wealth taxes are one answer, and the idea is more popular than it used to be. Even formerly moderate groups like the International Monetary Fund have called for one-off wealth taxes to help support an economic recovery.
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.