(CNN) — Sen. Bernie Sanders on Tuesday unveiled plans for a hefty tax on the ultra-rich that he says will pay for several of his expensive social spending proposals, including part of “Medicare for All.”
Sanders, a Vermont independent, has come under fire from a number of his 2020 Democratic presidential primary rivals over the cost of his plans, which would run into the trillions of dollars. While he has maintained that the wealthy would foot the bill for most of those proposals, Sanders has acknowledged that the middle class would see their taxes rise to pay for Medicare for All. He says that many Americans would still come out ahead because they would no longer pay premiums or out-of-pocket bills for health care.
The new proposal was rolled out a day after Bloomberg reported that a polling firm associated with former Vice President Joe Biden had been studying which arguments against Medicare for All would be most effective with voters. One of its conclusions: the cost to taxpayers. Sanders responded to the news by insisting again that “no one earning less than $29,000 will pay any new taxes” under his plan, which he called “a great deal for the American people.”
Massachusetts Sen. Elizabeth Warren has already unveiled plans to push for a similar wealth tax, which she often cites on the campaign trail — to roaring approval from supporters — as the potential source of funding for a series of ambitious programs. Sanders could be angling to establish a similar pitch, and respond to Biden, with a populist win-win proposal that pays for expensive new programs by soaking the rich.
Under Sanders’ “tax on extreme wealth,” married couples worth more than $32 million would pay a 1% tax on their wealth above that threshold. The rate would rise to 2% on net worth between $50 million and $250 million, climbing in increments to a 8% tax on wealth above $10 billion.
The tax would be levied on single filers worth more than $16 million, with the top 8% rate assessed on their wealth above $5 billion.
Sanders has long railed against the growth in income inequality in the US, noting that over the last 30 years, the top 1% has seen a $21 trillion increase in its net worth, while the bottom half has lost $900 billion in wealth.
“We are going to take on the billionaire class, substantially reduce wealth inequality in America and stop our democracy from turning into a corrupt oligarchy,” said Sanders, who earlier this year released a proposal that would expand the federal estate tax on the wealthiest 0.2% of Americans, imposing a top rate of 77% on estates worth more than $1 billion.
His wealth tax, meanwhile, would hit the richest 180,000 households in US who are in the top 0.1%, according to the proposal. It would cut the wealth of billionaires in half over 15 years.
The levy would raise $4.35 trillion over a decade, according to University of California Berkeley economics professors Emmanuel Saez and Gabriel Zucman, who analyzed the plan for the Sanders campaign. It would eliminate the gap in wealth growth between billionaires and the middle class.
The professors, who are well known for their work on income inequality and taxing the rich, also evaluated Warren’s wealth tax proposal, which she released in January. Warren is calling for a 2% levy on wealth above $50 million, with an additional 1% tax on net worth above $1 billion. Saez and Zucman estimated her plan would raise $2.75 trillion over 10 years from about 75,000 households.
Sanders would use the revenue raised from his tax to pay for his universal childcare proposal and his affordable housing plan, which calls for capping annual rent increases and investing in affordable housing. His housing plan is estimated to cost $2.5 trillion over a decade.
It would also help fund Medicare for All, which independent experts have estimated could cost around $32 trillion over 10 years.
Taxing wealth, however, could be very difficult to do. There are questions about whether it is permitted by the US Constitution, with legal scholars falling on both sides of the argument. Also, wealth taxes can be tough to administer since the rich often have assets that are hard to value.
Sanders maintains a wealth tax is constitutional, and his proposal includes several enforcement mechanisms.