New Tax Bill Could Impact 100,000 Families

Senator Elizabeth Warren of Massachusetts is leading a group of progressive lawmakers' efforts to increase taxes on the wealthiest Americans, a move that she has long been advocating for.

The measure, the Ultra-Millionaire Tax Act, would introduce a 2 percent annual tax on the net worth of households and trusts between $50 million and $1 billion, and a 1 percent annual surtax on the net worth of households and trusts above $1 billion, adding up to an overall 3 percent tax.

According to Warren, the tax increase would impact only the wealthiest 100,000 households in the country. That's about 0.05 percent of the United States population, according to a press release shared by Representative Pramila Jayapal of Washington, who introduced the bill in the House along with Representative Brendan F. Boyle of Pennsylvania.

Five other Democratic senators and 27 Democratic lawmakers in the House of Representatives support Warren's bill.

Newsweek reached out to Warren's press team early Wednesday morning via email for comment.

According to the Democrats, the measure, which was reintroduced on Tuesday, would bring in at least $3 trillion in revenue over 10 years by simply requiring the top wealthiest households to "chip in 2 cents for every dollar of wealth over $500 million."

The bill also includes stronger rules on trusts, which the Democrats say are "a common method the ultra-wealthy utilize to avoid paying taxes that cost the federal government between $5 and $7 billion annually."

The proposed measures follow years in which the gap in wealth between the richest and the poorest in America has kept expanding. According to the Federal Reserve Bank of St. Louis's latest update on the situation, the wealth gap in the U.S. expanded between 2019 and 2022 despite widespread wealth gains.

The average wealth of the top 10 percent was $7.73 million, up 17 percent in 2022 from 2019. The next 40 percent owned an average wealth of $644,000, up 35 percent from 2019. The bottom 50 percent had, on average, less than $46,000 in wealth, up 80 percent from 2019.

Despite this growth, families in the bottom 50 percent owned only 2 percent of the total wealth distributed across the country ($139.1 trillion), while the top 10 percent owned almost three-quarters of the pie, at 74 percent. The middle 40 percent owned 24 percent of the U.S. total wealth.

The issue of the ultra-wealthy in the U.S. and their contribution to society has grown in recent years. President Joe Biden said during the State of the Union earlier this month that he will be cracking down on billionaires who are avoiding paying as many taxes as they should.

The Biden administration plans on requiring billionaires in the wealthiest 0.01 percent (those with wealth of more than $100 million) to pay at least 25 percent of their income in taxes.

However, the bill has little to no chance of passing through the Republican-controlled House of Representatives, as most GOP lawmakers support tax cuts. The measure was first introduced in 2019 and was a key part of Warren's presidential campaign, but Biden abandoned it despite widespread support among Democratic voters.