Proposes a tax on the wealth of the most millionaires

US billionaires get richer 0:59

(CNN) -

Now that Democrats control the White House and Congress, President Joe Biden and other party leaders are pushing to spend heavily to jumpstart the economy and address income inequality.

Massachusetts Sen. Elizabeth Warren, Washington Rep. Pramila Jayapal, and Pennsylvania Rep. Brendan Boyle want the ultra-rich to pay for it.

All three Democrats unveiled the Ultra Million Tax Act on Monday morning.

It would impose an annual tax of 2% on the net worth of households and trusts between US $ 50 million and US $ 1 billion, as well as a 1% annual surcharge on assets above US $ 1 billion, for a tax 3% overall for billionaires.

The controversial proposal, co-sponsored by Vermont Senator Bernie Sanders and others, is similar to the one Warren submitted in 2019 as a candidate in the Democratic primary.

Taxing the rich served as a primary way for Warren and Sanders to come up with funding their plans to expand health coverage, child care and other proposals when they were competing for the primary nomination.

"As Congress develops additional plans to help our economy, the estate tax should be at the top of the list to help pay for these plans because of the huge amounts of revenue it would generate," Warren said in a release.

"This is money that should be invested in child care and early education, K-12 [schooling system], infrastructure, all of which are priorities of President Biden and the Democrats in Congress."

Roughly 100,000 American families would be subject to the tax, which would raise about $ 3 trillion in a decade, according to an analysis provided by lawmakers.

It was conducted by UC Berkeley professors Emmanuel Saez and Gabriel Zucman, who are well known for their left-wing work on income and wealth inequality.

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The earnings estimate is higher than what Warren was given during the campaign in part because the peak of wealth, particularly among billionaires, has grown in the past two years and is expected to continue to rise, they said.

Two years ago, they estimated it would raise $ 2.75 trillion in a decade and affect 75,000 households.

Although the coronavirus caused a severe economic recession in the US, it has had a very disparate impact on American families.

Higher-income households have largely kept their jobs through telecommuting, and stock market earnings have increased their net worth.

Those at the opposite end of the scale have been disproportionately affected by layoffs and have had a harder time finding new jobs during the so-called 'K-shaped' recovery.

However, taxing wealth could be very difficult.

There are questions about whether it is allowed by the US Constitution, and legal scholars are on both sides of the argument.

Additionally, estate taxes can be difficult to administer, as the wealthy often have assets that are difficult to value.

Elizabeth Warren Tax