A new federal tax proposal aimed at US billionaires, pitched by Sen. Bernie Sanders and Rep. Ro Khanna as a way to raise $4.4 trillion over 10 years, is facing familiar pushback from crictics asking how much revenue it could actually lead to in the real world.
The bill, titled the Make Billionaires Pay Their Fair Share Act, would apply a 5% annual tax to the net value of assets above $1 billion. Sanders and Khanna say the measure would affect 938 individuals and would not increase taxes on people below the $1 billion threshold.
“At a time of unprecedented income and wealth inequality, this legislation demands that the billionaire class in America finally pay their fair share of taxes,” Sanders said in a press release. “We can no longer tolerate a corrupt tax code that enables billionaires to pay a lower tax rate than the average worker.”
Khanna framed the proposal as a response to household cost pressures, saying families are “struggling to cover the cost of healthcare, housing, and basic needs,” and arguing that lawmakers can “tax billionaires a modest amount” while preserving innovation.
Under the plan described by Sanders’ office, the wealth tax would be assessed annually on assets rather than income, a design that would pull in investment accounts, real estate, and privately held business interests that can be harder to value than publicly traded securities.
The proposal also calls for a federal “registry of ownership for assets,” with taxpayers required to report annual valuations of various holdings, including privately held businesses. A 1% sliver of the revenue would be channeled to the IRS to boost enforcement.
Sanders and Khanna have tied the revenue estimate to a broader set of policy goals, including one-time $3,000 payments for people in households earning $150,000 or less. Reporting by Fox News points to other spending priorities such as expansions to Medicare and Medicaid, affordable housing initiatives, and containing childcare costs.
The lawmakers estimate that under the legislation, Elon Musk would owe $42 billion, while Mark Zuckerberg and Jeff Bezos would each owe about $11 billion.
The headline $4.4 trillion estimate is based on an analysis by economists Emmanuel Saez and Gabriel Zucman, which assumes a relatively low evasion rate of 10% – a key input that other analysts dispute.
Tax Foundation senior fellow Jared Walczak questioned the premise behind the estimate, writing on X that it assumes the tax would have “no economic ramifications worth mentioning.”
Expounding on that, a policy note by the Tax Foundation raised familiar arguments against taxes on wealthy individuals, maintaining that a 5% annual wealth tax could face substantial avoidance pressure and administrative complexity, both of which could reduce collections.
The group also stressed how the levy would compound over time because it is applied to a stock of wealth, not annual income. A 5% wealth tax on assets earning a 5% return can be “economically equivalent to a 100 percent tax on that return,” the foundation's analysts noted.
Using different assumptions about how taxpayers respond, the Tax Foundation said revenue could fall meaningfully below $4.4 trillion. The note pointed to an estimate of about $3.3 trillion over 10 years under a higher evasion assumption, and it cited an outside projection that collections could be closer to $2.3 trillion over a decade.
The Tax Foundation also flagged legal uncertainty, arguing the tax would be in “legally perilous territory” given constitutional rules around direct taxation.
"[T]he Constitution requires direct taxes to be apportioned among the states, and the Sixteenth Amendment permits unapportioned direct taxation only in the case of income taxes," it noted.
The newest proposal comes as similar debates over taxing large fortunes are playing out at the state level. In California, arguably the most crucial battlefront, a joint poll by UC Berkeley Citrin Center for Public Opinion Research and Politico poll found 50% of voters backed a proposed one-time 5% tax on the ultrawealthy, with 28% opposed.
Jack Citrin, a University of California Berkeley political science professor and co-director of the poll, saw the early results as “good news,” but added that 50% is “a fairly tenuous starting point for a ballot initiative” as campaign messaging ramps up.
The poll also showed voters were receptive to warnings about economic fallout. Majorities said they were concerned the tax could push affluent individuals or businesses out of the state, and 67% said they feared middle class Californians would face tax hikes to make up any revenue shortfall.
The numbers show a worrying trend – should we be concerned?
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