New report reignites push for wealth tax - EIA Family Office Pte. Ltd.

A blockbuster ProPublica report on the taxes paid by the richest Americans is reigniting a push from progressives for a wealth tax.

The report, based on tax-return data ProPublica received from an anonymous source, details how prominent billionaires like Jeff Bezos and Elon Musk have paid little to no taxes in some recent years, particularly when compared to their wealth gains.

The article comes as President Biden has proposed raising taxes on the wealthy and corporations to pay for his major spending proposals. Democrats have increasingly made raising taxes on the rich a top priority in recent years, and some progressives have called for going even further than Biden's proposals by establishing a wealth tax that would impose taxes on net worth rather than income.

Democrats said that ProPublica's report underscores the need for action to increase taxes on the rich, who have most of their wealth tied up in stocks and real estate. Gains in the value of investments are not taxed until the assets are sold. 

“The ProPublica story reminds us again why we need a wealth tax,” Sen. Elizabeth Warren (D-Mass.) said Tuesday. “People all across this country know that the game is rigged, but the ProPublica story just mashes that right in folks' faces.”

Sen. Bernie Sanders (I-Vt.), another prominent progressive, said that the report demonstrates the need at a minimum to pass the tax increases on the wealthy and corporations that Biden has proposed.

“To the surprise of nobody that I know, the rich and the powerful avoid paying their fair share of taxes,” said Sanders, the chairman of the Senate Budget Committee.

Warren and Sanders both proposed wealth taxes during their 2020 presidential campaigns, but Biden did not. Treasury Secretary Janet Yellen said at a New York Times virtual event earlier this year that there are implementation challenges associated with a wealth tax.

Biden has proposed paying for his $1.8 trillion American Families Plan, focused on areas such as child care and education, through tax increases on high-income households that include raising the top individual tax rate from 37 percent to 39.6 percent and taxing capital gains at the same rates as ordinary income for high earners. He has also proposed paying for his $2.3 trillion American Jobs Plan, focused on transportation and addressing climate change, through higher taxes on corporations.

“Broadly speaking, we know that there is more to be done to ensure that corporations, individuals who are at the highest income, are paying more of their fair share, hence it's in the president's proposals, his budget, and part of how he's proposing to pay for his ideas,” White House press secretary Jen Psaki said Tuesday when asked about the ProPublica article.

Warren said she hopes the ProPublica story could push the White House to get behind a wealth tax. She said the administration is “heading in that direction when they talk about taxing capital gains.”

“We absolutely need a wealth tax,” Rep. Pramila Jayapal (D-Wash.), chair of the Congressional Progressive Caucus, told The Hill.

The new report “is the latest data point in a bounty of evidence that proves the inequality of our tax system,” said Jayapal, adding that the effects of the COVID-19 pandemic also exposed the wealth gap between billionaires who got richer from the stock market and millions of Americans who lost their jobs and health insurance. 

Congress could level the playing field, Jayapal said, by passing Biden's American Jobs and Families Plan, as well as her legislation with Warren creating a wealth tax, the Ultra-Millionaire Tax Act.

“Both steps would ensure that the rich pay their fair share, and we need to make them law,” she said.

Still, it's unclear how quickly any tax increases on the wealthy will be enacted. 

Moderate Democrats have balked at the idea of a wealth tax. And on Wednesday, a bipartisan group of Senate moderates working on an infrastructure proposal ruled out tax increases to pay for the package.  

Some key progressives want Democrats to move forward with using the budget reconciliation process to pass an infrastructure package so that it would not need any Republican votes to pass.

Senate Finance Committee Chairman Ron Wyden (D-Ore.) said following the ProPublica report that he plans to release more details soon about his proposal to tax wealthy households' investment gains annually, rather than when the investments are sold. He said he's committed to ending a “double standard” where middle-class Americans pay taxes with every paycheck but wealthy people can defer paying taxes.

Rep. Ro Khanna (D-Calif.), national co-chair of Sanders's 2020 presidential campaign, called ProPublica's revelations a “bombshell report” that highlights the structural inequities between billionaires and working-class Americans when it comes to paying taxes. 

Echoing Sanders, Khanna urged lawmakers to pass Biden's tax hikes on the rich but added that more reforms would be needed, like Sanders's “For the 99.5 Percent Act” which increases the estate tax and closes some tax loopholes for wealthy families. Biden's families plan doesn't propose an increase to the estate tax but it does call for taxing capital gains at death.

“Congress should pass President Biden's tax reforms which would close many of the loopholes billionaires are using to dodge paying their taxes, but we'll need broader reforms to close them all,” Khanna, who represents parts of Silicon Valley, said in a statement to The Hill. “The wealthiest corporations and individuals in America must start paying their fair share.”

Other progressives had a tough, direct message for wealthy executives like Bezos, the soon-to-be ex-Amazon CEO who is set to blast off into space next month in a rocket ship built by one of his companies, Blue Origin.   

“The ultra rich pay nothing in taxes, amassing their obscene wealth on the broken backs of everyday Americans paid poverty wages,” tweeted Rep. Rashida Tlaib (D-Mich.).

“They're lucky we're only asking them to pay their fair share. When Bezos goes to space next month he can keep his ass there.”

Both Democrats and Republicans are concerned about the disclosure to ProPublica of confidential tax information, pressing the IRS to investigate whether anyone at the agency leaked the data. ProPublica said that it obtained the information by an anonymous source, and that it does not know the source's identity. 

Administration officials said that the issue is being referred to several offices that have the authority to investigate, including the Treasury Department's inspectors general, the FBI, and the U.S. Attorney's Office for the District of Columbia.

Democrats said the findings in the ProPublica article can't be ignored while investigations into the source of the data in the story play out.

“President Biden and the Democratic House have made tax fairness an absolute top priority,” Rep. Bill Pascrell (D-N.J.), a senior member of the tax-writing House Ways and Means Committee, said in a statement Tuesday. “If we don't act swiftly to fix the American tax system, public confidence may be fractured forever.”

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