BOSTON — Democratic Sen. Elizabeth Warren is leading a renewed effort in Congress to impose a wealth tax on the nation’s top earners.
The proposed Ultra-Millionaire Tax Act, filed by Warren and other Democrats, would set a new 2% annual surtax on the net worth of households and trusts between $50 million and $1 billion and a 1% annual surtax on the net worth of households and trusts above $1 billion, adding up to an overall 3% tax.
The plan also includes anti-tax evasion and avoidance provisions that seek to prevent wealthy families from squirreling away money in trusts to avoid taxation.
The lawmakers say the new wealth tax would drum up an estimated $3 trillion over 10 years by requiring the nation’s top earners to “pay their fair share” of taxes.
“No one thinks it’s fair that Jeff Bezos gets enough tax loopholes that he pays at a lower rate than a public school teacher,” Warren, a Cambridge Democrat, said in a statement.
“All my bill is asking is that when you make it big, bigger than $50 million dollars, then on that next dollar, you pitch in two cents, so everyone else can have a chance.”
Warren and other backers of the plan say the gap in wealth between the richest and the poorest in America is expanding.
They cite Federal Reserve data showing the average wealth of the top 10% of the nation was $7.73 million, up 17% in 2022 from 2019. Despite that growth, families in the bottom 50% owned only 2% of the total wealth distributed across the country, according to the data.
The proposal, which is also backed by Massachusetts Sen. Ed Markey and Reps. Ayanna Pressley and Jim McGovern, would impact about 100,000 families nationwide, according to Warren’s office.
Warren filed a similar bill in 2019 when she was running for president, but it failed to gain momentum. Even if her proposal is approved by the Democratic-led Senate it faces long odds in the Republican-controlled House of Representatives, where lawmakers have resisted calls from Democrats to take up a wealth tax.
President Joe Biden, a Democrat who is seeking reelection this fall, is also pushing for higher taxes on the nation’s top earners.
Earlier this month, Biden unveiled a federal budget proposal that calls for $5 trillion in additional taxes on corporations and high earners over the next decade.
The plan, which is subject to congressional approval, includes raising the corporate tax rate to 28% from 21%, which is the level that was set by the 2017 Tax Cuts and Jobs Act under then-President Donald Trump.
Biden wants to raise the tax rate on capital gains such as stock sales for individuals who earn more than $400,000 to 39.6% and impose a 25% “ “billionaire tax” on individuals with assets of more than $100 million.
Massachusetts has a millionaires’ tax — set by a voter-approved law went into effect last year — which charges a 4% surtax on incomes above $1 million, in addition to the state’s flat 5% personal income tax. The money is earmarked for education and transportation.
A 2023 report by the nonpartisan Tax Foundation, a Washington D.C-based think tank, ranked Massachusetts 46th in the nation for its business tax climate, ahead of only neighboring Connecticut, California, New York and New Jersey, citing the negative impacts of the millionaires’ tax.
The foundation cautioned states against taxing the rich to drum up money, saying it undercuts investment and drives entrepreneurs and innovators away.
Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites. Email him at cwade@cnhinews.com