Billionaires could see tax rates as high as 97.5% under Sanders

Billionaires could see tax rates as high as 97.5% under Sanders
That compares with the 23% rate currently and the 62% rate proposed by Warren.
OCT 14, 2019
By  Bloomberg
Billionaires may have much more to fear from a Bernie Sanders presidency than they do from an Elizabeth Warren administration, according to two economists advising both candidates. That's one of the conclusions of a new interactive website developed by University of California, Berkeley professors Emmanuel Saez and Gabriel Zucman. If Mr. Sanders had his way, they calculate that the 400 richest Americans, on average, would have an effective tax rate of 97.5%. That includes not only their income, but also a wealth tax that whittles away at the family fortune. The 97.5% average effective tax rate under his plans compares with 23% currently and 62% under Ms. Warren's proposals, according to the two economists. Mr. Sanders and Ms. Warren have both pitched wealth taxes, which is a key reason that their plans tax billionaires so much more. Ms. Warren's wealth tax places a 2% levy on fortunes above $50 million and a 3% levy on assets more than $1 billion. Mr. Sanders' plan goes further, and starts taxing wealth of $32 million at 1%, increasing to an 8% tax on fortunes above $10 billion. [Recommended video: Biggest changes advisers should make to be successful in the future]​ "With the wealth tax, you get directly at the stock instead of hitting the flow of income, making it a much more powerful de-concentration tool than income taxes," Mr. Saez said in an email about Mr. Sanders' tax, which Mr. Sanders has said would cut the number of billionaires in the country in half in 15 years. The calculations by Mr. Saez and Mr. Zucman cover state, local and federal taxes and also treat health insurance premiums that individuals pay as a tax, arguing that they are one of main drivers of inequality in the U.S. If a Democrat wins in 2020, wealthy Americans would fare best if it were Joe Biden, even though the former vice president would hit the rich with a markedly bigger tax burden -- an effective average rate of 30.6%, or more than 7 percentage points higher than they face now under President Donald J. Trump. [More: Warren's wealth tax could create compliance challenges] Large tax increases on the rich have been a key topic in the 2020 Democratic primary as candidates have looked for proposals that would lessen inequality and raise lots of revenue to pay for expensive social programs, such as expanded health care and free college tuition. The economists released an interactive website Sunday that lets users select different tax rates to see how levies on various income groups are increasing. Mr. Saez and Mr. Zucman are also releasing a book Tuesday, "The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay" (W.W. Norton & Co.), making the case for large tax increases on top earners. All major Democratic candidates have called for higher taxes on the wealthy, including raising the income tax rates or increasing levies on capital gain income. Mr. Sanders, Ms. Warren and Sen. Kamala Harris have also floated levies on stock and bond trades. Taxes on the wealthy have historically been popular with voters. For decades a majority of polls have shown that people think the wealthy pay too little in taxes. Gallup found in April that 62% of people say that "upper-income" individuals pay too little in taxes. [More: Financial advisers take issue with Democratic plans to tax the rich]

Latest News

SEC bars ex-broker who sold clients phony private equity fund
SEC bars ex-broker who sold clients phony private equity fund

Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.

The key to attracting and retaining the next generation of advisors? Client-focused training
The key to attracting and retaining the next generation of advisors? Client-focused training

From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.

Chuck Roberts, ex-star at Stifel, barred from the securities industry
Chuck Roberts, ex-star at Stifel, barred from the securities industry

"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.

SEC to weigh ‘innovation exception’ tied to crypto, Atkins says
SEC to weigh ‘innovation exception’ tied to crypto, Atkins says

Chair also praised the passage of stablecoin legislation this week.

Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest
Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest

Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.