When he introduced his Medicare-for-all bill last week, Bernie Sanders also put down on paper the idea he’s been talking about, sometimes loudly, sometimes with caution, other times not publicly at all, for more than 20 years: a “wealth tax” in the United States.
In 1997, in his book, Outsider in the House, he declared it “high time to establish a tax on wealth similar to those that exist in most European countries.” Nine years later, during his first race for U.S. Senate, his opponent quoted the passage online, printed it on brochures, and pushed it in statements: “Sanders’ European-style wealth tax,” on “everything they own every year. Every tractor, cow, and acre.” In response, the Sanders campaign argued that he had never formally proposed a wealth tax, just floated the idea.
During the Democratic primary in 2016, the Sanders campaign did consider an official wealth tax, two former officials said, but the idea died over concerns about the reality of implementation and that the tax plan would be perceived as far out of the mainstream.
Now, nearly a year after the election, the 76-year-old Vermont senator is one of the most popular politicians in America. Ahead of his Medicare-for-all announcement last week, a total of 16 senators backed the bill, putting about one third of the chamber’s Democrats behind single-payer health care, an almost real-time shift in the party’s baseline.
But few American lawmakers have embraced a wealth tax — an annual federal tax on the net assets of the very rich — though economists and academics, both liberal and conservative, have made the case for one before. Others have argued that any wealth tax would be dauntingly complicated, and potentially unconstitutional. Sanders has described it as one way to spread the concentration of wealth.
Last week, he outlined a wealth tax policy for the first time in a white paper released alongside the single-payer bill, with a list of 10 ideas for how to pay for such a program.
“This is something that he's always given some consideration to,” said Warren Gunnels, a policy adviser who has worked for Sanders for 18 years, served on his presidential campaign, and helped craft the new bill.
As outlined in the six-page fact sheet, titled “Options to Finance Medicare-For-All,” Sanders’ federal wealth tax would establish an annual 1% levy on net worth exceeding $21 million. (For a family with $21.5 million in assets, that would mean paying a 1% tax on $500,000, or $5,000. For the wealthiest man in the United States, Bill Gates, whose net worth is speculated to be valued around $86 billion, the annual 1% tax would likely apply to all but a sliver of his net assets, and potentially total hundreds of millions of dollars.)
In the white paper, Sanders claims that a tax on net worth would raise $1.3 trillion in 10 years. Implementing a federal wealth tax is untested and would involve complexities. Sanders officials said the IRS could be responsible for assessing net worth annually. The Treasury Department could handle items not easily appraised, using average appreciation rates and appraisals every 5 years instead of one.
The idea, more broadly, is to level the distribution of wealth. During the presidential campaign, young and progressive voters gathered in massive numbers to hear Sanders punctuate his stump speech with dire statistics on the state of inequality. He is quick to tell voters that the 160,000 families in top 0.1% hold about the same share of wealth as the 144 million families in the bottom 90%; that the wealthiest 20 families, own more than the bottom 50%; and that just one family, the Waltons of Wal-Mart, owns more than the bottom 40%.
“If you know anything about Sen. Bernie Sanders, reducing the extreme amount of wealth inequality in America has been a very strong concern of his. One of the most obvious ways to reduce this extreme wealth inequality in our country is to impose a tax on wealth,” Gunnels said, citing the French economist Thomas Piketty as a reference point on their own tax.
Piketty's 2013 international bestseller, Capital in the Twenty-First Century, makes the case for an annual “global” wealth tax of up to 2% for rich households, adopted by cooperating governments across the world (a “utopian” ideal, he says, for a tax that might first be tried regionally). The book, a 700-page theory-of-the-case on the history and trajectory of wealth inequality, describes a widening gap in private capital “even more worrisome” than the widening gap in income — with accumulated and inherited wealth growing at a higher rate of return than the economy. The result, Piketty says, is “indefinite” wealth concentration, a threat to “meritocratic values” and “social justice.”
In the U.S., the book generated a months-long debate among economists, academics, and columnists. But in Washington, even as Democratic lawmakers praised his work, they steered far from the words “wealth tax.” When questioned about the idea in a 2014 interview, Sen. Elizabeth Warren, the biggest star in progressive politics at the time, didn’t engage. “We need to take a hard look overall at our approach to taxation,” she replied.
Sanders’ embrace of a federal wealth tax, even as merely an “option,” puts him in a tiny group of national politicians who have voiced support for the idea.
In 2012, the left-leaning Green Party proposed a tax of 0.5% on assets exceeding $5 million in its official platform. (Though when asked about the plan at the time, their candidate, Dr. Jill Stein, stressed the room for “distinction” between her positions and the platform.) And before that, in 1999, there was Donald Trump. The business mogul, exploring a presidential campaign at the time, pitched a one-time tax of 14.25% on individuals with net assets of more than $10 million. (In a line that could have come from Sanders, Trump said the tax would, and should, affect the “1 percent of Americans who control 90 percent of the wealth in this country.”)
As Democrats sidle up to Sanders, some planning their own presidential campaigns, they now face the question of paying for these programs, and with that, how closely they will or will not align with Sanders when it comes to tax and economic policy.
Among the 16 Democratic senators backing the Medicare-for-all bill alongside Sanders, spokespeople for just four replied when asked if they would consider the wealth tax option: Sens. Patrick Leahy of Vermont (“This was a white paper for discussion and not part of the bill or the plan going forward”), Al Franken of Minnesota (“The financing isn’t part of the bill”), Jeff Merkley of Oregon (“There are multiple paths to get to Medicare for All”), and Kamala Harris of California (“She is open to discussing a host of different options to pay for the guarantee of health care for all Americans”).
"As Sen. Sanders said, this is the beginning of the debate: Let's have a debate on the revenue options, let's have a debate on Medicare-for-all,” said Gunnels.
“They're options. If somebody has a better idea then we'll look at those."