Make Billionaires Pay Act would institute new tax on wealth gains during COVID-19 pandemic by anybody worth $1 billion or more
Sponsors want to use the money to pay for Americans’ out-of-pocket healthcare costs for a year.
Context
Due to unprecedented levels of unemployment insurance and business loans during the COVID-19 pandemic, 2020 set a new record level of federal government spending outside of wartime. Republicans have essentially said this surging spending should be considered a one-year aberration due to extraordinary circumstances, rather than a new normal.
But without a corresponding rise in revenue, the deficit will soar to unprecedented levels. The Congressional Budget Office projects a $3.3 trillion budget deficit this year, the highest since 1945, the last year of World War II.
But while many ordinary Americans are struggling, the country’s richest person Jeff Bezos on July 20 alone earned $13 billion in a single day. So now some Democrats are essentially adopting the Republican talking point in reverse. What if government revenue surged as a one-year aberration due to extraordinary circumstances, but in a way that would prevent it from being a new normal?
What the legislation does
The Make Billionaires Pay Act would impose a 60 percent wealth tax on Americans worth at least $1 billion, for any money they earned between March 18 and December 31 this year. The legislation would then be used to reimburse Americans’ for their out-of-pocket healthcare costs.
This differs from the status quo in two key ways. One is that the legislation would apply for one year only, rather than as a change to the tax code moving forward in perpetuity. Also, it would tax total wealth, rather than income earned in a single year.
(This legislation would then apply to President Trump, who — despite paying as little as $750 in taxes some years — has a cumulative net worth that would be in the billions.)
The Senate version was introduced on August 6 as bill number S. 4490, by Sen. Bernie Sanders (I-VT). The House version was introduced a few days later on August 11 as bill number H.R. 8020, by Rep. Ilhan Omar (D-MN5).
What supporters say
They also claim the legislation would raise $421.7 million in tax revenue, although the nonpartisan Congressional Budget Office has not yet provided their own independent estimate.
“It is shameful that billionaires profit off the suffering of working families as the pandemic ravages the economy and kills thousands of Americans every day,” Rep. Omar said in a press release. “For far too long, the richest 0.001% of America have avoided paying their fair share in taxes. This bill will go a long way towards addressing our nation’s massive wealth inequality and finally guaranteeing healthcare as a human right”
“At a time of enormous economic pain and suffering, we have a fundamental choice to make. We can continue to allow the very rich to get much richer while everyone else gets poorer and poorer,” “The legislation I am introducing today will tax the obscene wealth gains billionaires have made during this extraordinary crisis to guarantee healthcare as a right to all for an entire year,” Sen. Sanders said in a separate press release. “Or we can tax the winnings a handful of billionaires made during the pandemic to improve the health and well-being of tens of millions of Americans.”
What opponents say
Opponents counter that a wealth tax, as opposed to an annual income tax, would be unconstitutional — a position even some Democrats take.
The Constitution requires that any “direct taxes” be apportioned by state population, which the wealth tax would not. (The one exception is income taxes, which were specifically exempt from the state apportionment requirement by the Sixteenth Amendment.)
“This is not about whether wealthy Americans should pay more. I think we’re all in agreement on that. It’s a question of, do you have a real solution to make it happen?” former Rep. John Delaney (D-MD6) said last year at a Democratic presidential primary debate. “We can raise the capital gains rate to match the ordinary income. You know the last president to do that was actually Ronald Reagan… But we don’t need to come up with new taxes that are arguably unconstitutional and will be fought in the court for years.”
In 2018, the last year he served, Rep. Delaney was the sixth-richest member of Congress.
Odds of passage
The House version has attracted 12 cosponsors, all Democrats. It awaits a potential vote in the House Ways and Means Committee.
The Senate version has attracted two cosponsors, both Democrats. It awaits a potential vote in the Senate Finance Committee. Odds of passage are low in the Republican-controlled chamber.
This article was written by GovTrack Insider staff writer Jesse Rifkin.
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