Elizabeth Warren is running for president with a progressive policy platform that she affectionately labels “economic patriotism.” A central plank of this platform is a “wealth tax” that will target Jeff Bezos, Bill Gates, and other billionaires who boast net worths comparable to the gross domestic products of many small countries.
According to Warren, her “Ultra-Millionaire Tax” would raise $2.75 trillion in a decade by requiring the 75,000 households worth at least $50 million to pay a 2% tax on their entire net worth, rather than just their income. Billionaires would face an annual bill of 3%.
Warren claims that tax will only target the “top 0.1%.” Think Amazon CEO Jeff Bezos and his pre-divorce net worth of $160 billion – not the middle class.
But what would Bezos’ net worth be today if the United States had always had a wealth tax? Now, thanks to a new paper from two University of California, Berkeley economists, we know the answer.
Economists Emmanuel Saez and Gabriel Zucman found that a “moderate wealth tax” equivalent to Elizabeth Warren’s proposal would have reduced Jeff Bezos’ net worth by $73.2 billion from the 2018 Forbes estimate of $160 billion.
Of course, that wealth tax would have eroded their net worths as well – and by a far greater margin.
Saez and Zucman estimate that it would have caused Bill Gates’ net worth to fall to $36.4 billion from $97 billion. Warren Buffett’s wealth would be just $29.6 billion, down from $88.3 billion today.
Together, their assets would decline by a staggering 64%. That’s a much larger percentage than Bezos or other dot-com titans like Mark Zuckerberg ($44.2 billion from $61 billion for a decrease of 28%) since Gates and Buffett have spent more time on the billionaire’s index.
Altogether, the 15 richest Americans would find $433.9 billion less in their pockets if they’d been paying the “ultra-millionaire tax” since 1982 (the date Forbes launched its “rich list”).
But that’s the past. How would Warren’s wealth tax affect the Bezos fortune moving forward?
Together, Jeff Bezos and ex-wife MacKenzie would pay $4.8 billion per year on their current $160 billion in combined net worth. That’s approximately 76,000 times the median US household income of $63,179.
Unfortunately for America’s wealthiest billionaires (or at least their bank accounts), Elizabeth Warren might have a better chance at securing the Democratic presidential nomination than most people realize.
According to the RealClear Politics national average of Democratic presidential primary polls, Joe Biden leads with a comfortable 11.8% advantage over Warren. He enjoys a similar gap in Iowa, whose Feb. 3 caucus officially kicks off the Democratic primary’s electoral race.
However, the betting markets tell a very different story. Data from prediction market PredictIt, which operates in the US under a CFTC exemption, reveal that gamblers are putting their money on Warren.
The Massachusetts senator currently headlines the “Who will win the 2020 Democratic presidential nomination?” race with 3/1 odds. Biden ranks second with slightly better than 4/1 odds.
However, Jeff Bezos, Bill Gates, and other high net-worth individuals don’t need to start tightening their $249,000 Gucci diamond-encrusted belts just yet.
Even if Warren wins the 2020 election (PredictIt places her odds at slightly worse than 4/1 compared to President Trump’s ~2.5/1 odds), her wealth tax proposal – like many of her other policy planks – would likely face an uphill battle on Capitol Hill, followed by an equally-stiff challenge before the Supreme Court.