Democratic presidential candidates Elizabeth Warren and Bernie Sanders are practically the only major politicians supporting a wealth tax to reduce inequality and fund government programs, even though polling shows nearly two-thirds of Americans support it.
Story Transcript
GREG WILPERT: Welcome to The Real News Network. I’m Greg Wilpert in Baltimore.
Nearly two-thirds of Americans support the introduction of a wealth tax, according to a recently published Reuters/Ipsos opinion poll. That is, 64% of respondents agree with the statement, “The very rich should contribute an extra share of their total wealth each year to support public programs.” The issue of a wealth tax is one that presidential candidates Elizabeth Warren and Bernie Sanders have raised by presenting concrete proposals for such a tax. They’ve presented the tax as a means for raising revenues for programs, as well as for reducing inequality in the United States, which is at its highest level since the Gilded Age of the late 19th century.
Here’s how they each have presented their proposals.
ELIZABETH WARREN: I have proposed a two-cent wealth tax. That is a tax for everybody who has more than $50 million in assets, your first $50 million is free and clear, but your $50 millionth and first dollar, you’ve got to pitch in two cents. And when you hit a billion dollars, you’ve got to pitch in a few pennies more. Here’s the thing. Doing a wealth tax is not about punishing anyone, it’s about saying, “You’ve built something great in this country, good for you. But you did it using workers all of us help pay to educate. You did it getting your goods on roads and bridges all of us helped pay for.”
MARTHA MACCALLUM: You don’t agree with 70%. What would your number be?
BERNIE SANDERS: In the campaign in 2016, we talked about 52%. But we’re going to fight for a wealth tax, and we’re going to demand that we end the absurdity. Families like the Koch brothers get billions and billions–
MARTHA MACCALLUM: But that didn’t answer my question.
BERNIE SANDERS: …of dollars in savings. That is absurd.
GREG WILPERT: During the Democratic presidential debates, some candidates however called the wealth tax punitive, unrealistic, and impractical.
Joining me now to discuss the wealth tax and its apparent popularity is Chuck Collins. He’s a senior scholar at the Institute for Policy Studies where he directs the IPS program on inequality and the common good; and co-edits the website Inequality.org. Also, he’s the author of the book: Is Inequality in America Irreversible? Thanks again for joining us today, Chuck.
CHUCK COLLINS: Thanks Greg, great to be with you.
GREG WILPERT: So, let’s start with why we are even having this debate on a wealth tax, that is the massive inequality that currently exists in the United States. We have a brief clip here from the media outlet Vox, which provides a brief visual representation of what’s going on.
VOX: Let’s take a quick tour of American household wealth. We can start over here, where we see people who own way more than they have. As we move further right, we can see, “Oh, that’s me. And there’s my doctor, who owns an expensive home. And there’s former heavyweight boxer Mike Tyson.” But when we get to the very richest people in the world, “Oh hey, that’s Beyonce,” we can zoom out so far that this chart looks like a stick, and we still can’t see the top of their wealth because these people are so much wealthier than the rest of us. In other words, this chart doesn’t just show wealth, it shows the staggering wealth inequality we have in America.
GREG WILPERT: Now this clip of course only shows a slice of time, not how inequality has increased in recent decades. Give us a brief idea, Chuck, of how inequality has increased and why it has increased.
CHUCK COLLINS: Well Greg, you mentioned the Gilded Age 100 years ago, when we saw a couple hundred families had fantastic concentrations of wealth and power. But in the interim, between the Depression and after World War II, we actually did have a period, maybe an aberration in US history, but a period of shared prosperity, the bottom fifth saw their real incomes go up at the same rate as the top fifth.
We had a progressive tax system, more progressive than we have today. So millionaires and billionaires paid much higher taxes, corporations paid higher taxes, so we had a lot less inequality. And then it’s really been the last 40 years since the late 70s that we’ve started to pull apart again, and where we see, as that Vox illustration showed, a kind of dizzying concentration of wealth and power. And it’s not just wealth flowing and income flowing to the top 1%, but the top one-tenth of 1%, and the billionaire group. And that’s really, in the last 20 years, that concentration of wealth among the billionaires is what’s brought us to this moment.
GREG WILPERT: Now, I mentioned earlier that both Senator Warren and Senator Sanders have proposals for a wealth tax. Senator Warren’s wealth tax would start, as she said in that clip, at $50 million, and everything over that would be taxed at a 1% rate annually. And Senator Sanders was a little bit more progressive and would start lower, I think it was $32 million and then go up to 8% for higher incomes, I think, for the billionaires. Now, as somebody who studies this issue of inequality, what do you think of these proposals?
CHUCK COLLINS: Well, I think they’re both really fantastic and powerful proposals that start to address the, I call it the plutocracy problem, that concentration of wealth and power. I think Senator Warren’s proposal came out first, almost a year ago, and she put it out there. And Sanders’s proposal came along, and his has a set of more graduated rates, so fortunes over $10 billion are taxed at an annual 8% rate.
I think they both begin to reverse this concentration of wealth, and I think the Sanders proposal as it’s currently designed would slow and reverse the concentration of wealth and power faster, just because it’s going to raise more money, it’s going to chip away at the biggest fortunes even faster. But it’s important to point out that Senator Warren, in her Medicare-for-All proposal, how to pay for that, she talked about adding to her wealth tax, so that the two proposals really are very… both of them support very comparable proposals that tax the very top at the highest rates.
GREG WILPERT: And would they raise enough money to pay for these programs that Sanders and Warren have proposed?
CHUCK COLLINS: Well, Senator Warren’s proposal estimated to raise about $2.75 trillion. Sanders, I think his proposal over 10 years would raise $4.3 trillion, so that’s a substantial amount of money. It’s not the full way toward a universal health insurance Medicare-for-All type program, but it would be a significant factor. I think it’s important to think about a wealth tax alongside an inheritance tax, which would be a once in a lifetime tax on a concentrated wealth as it transfers to the next generation, and even making the income tax more progressive. So putting an income tax surcharge on the top 10% of incomes over a couple million dollars. If you did those three things, you would start to really reverse these plutocratic conditions.
GREG WILPERT: Now, Sanders and Warren have both received some criticism of the wealth tax during the last debate, ranging from it being impractical, and I think Andrew Yang even mentioned that in Europe it was tried and not very effective, or something like that. And we also have a clip here of how Bill Gates responds to a question about the idea of a wealth tax.
BILL GATES: You know, I’ve paid over $10 billion in taxes. I’ve paid more than anyone in taxes, but I’m glad to have… if I’d had to pay $20 billion, it’s fine. But when you say I should pay $100 billion, okay, then I’m starting to do a little math about what I have left over.
GREG WILPERT: Chuck, what’s your reaction to what Gates is saying here, and also what others have said about the practicality of such a tax?
CHUCK COLLINS: Well, I think in that clip he’s just a little confused about what either of these wealth tax proposals would do. So an annual wealth tax, the tax is 2%, or in his case, maybe in the Sanders tax 8%, we’re talking about a tenth of his wealth, not hundreds of billions. It’s important to point out that Bill Gates has supported, he’s been a champion supporting a progressive inheritance tax, he’s not saying he’s against a wealth tax. I think if he understood the proposal on the table, he would probably support it as well. The reality is he’s put most of his money into a charitable foundation, so that will not be subject to any form of wealth tax unless the foundation’s private wealth is also treated as taxable wealth in a wealth tax.
GREG WILPERT: And what about the issue of practicality? That supposedly it’s been tried in some countries in Europe and didn’t work?
CHUCK COLLINS: Well, it is true. There’s been somewhat of a drift, some countries have given up their inheritance taxes and their wealth taxes. Others have made them robust. I think we should be looking in a US context. We have, for 100 years, had an inheritance tax, it’s called the estate tax. In its first phases, it was a meaningful tax that did break up concentrations of wealth and power. We have not had a wealth tax. There are potential constitutional issues that people have raised, but I think we should test that. We should push it as far as it’s possible. As you pointed out, there’s overwhelming support for this wealth tax proposal, and I think it’s really about just continuing the public social movement.
I mean, I think people are waking up to just how severe these inequalities are, and how meaningless most tax policies are in terms of addressing it. And I think people understand the dangers of concentrated wealth more and more every day, how it affects our lives. And so I think there’s going to just be continuing pressure building from below to levy a wealth tax, and I should say also from above. There are plenty of patriotic millionaires who are saying they will support and would look forward to paying a wealth tax if Congress moved that direction.
GREG WILPERT: I wanted to get into that issue specifically, as to with two-thirds of the US population supporting the wealth tax, and as you mentioned, even some millionaires supporting it, I mean, shouldn’t such overwhelming support mean that politicians would be jumping on the bandwagon to put it into effect? I mean, how do you see the chances of it actually being implemented in the years to come?
CHUCK COLLINS: Well, I think that this is the first year that we’ve had an annual wealth tax really in the public conversation. And I think that the initial support will continue to grow as people understand how few people will pay it, and how much money it will raise. So I expect that you will start to see more people running for office campaigning on a wealth tax. We have a candidate for governor in West Virginia who’s talking about running on a state wealth tax, so you’re going to see state and federal proposals to tax wealth.
People who are currently in Congress have never had to debate this, have never been held accountable by voters for it, but I think once people start to run on a campaign that basically, as both Warren and Sanders have said, “We want to tackle the problem of billionaires.” That’s a new, but powerful signal to people that, “I’m going to work for an economy that’s going to help the bottom 99%, and I’m not going to just kowtow to the very top.” And I think more and more people will win and lose elections based on this debate.
GREG WILPERT: Okay. Well, we’re going to continue to follow this debate of course, but we’ll leave it there for now. I’m speaking to Chuck Collins, senior scholar at the Institute for Policy Studies. Thanks again Chuck, for having joined us today.
CHUCK COLLINS: Thanks Greg.
GREG WILPERT: And thank you for joining The Real News Network.
Studio: Taylor Hebden, Bababtunde Ogunfolaju
Production: Genevieve Montinar, Bababtunde Ogunfolaju, Andrew Corkery