By H. Harrison Coleman
Few things scare Americans quite like the phrase “wealth redistribution.” Those evoke Soviet calls to revolution and modern radical groups slathered in red imagery who call for modern-day guillotines to be used on the likes of Jeff Bezos. But the reality of wealth redistribution is one that modern Americans are well aware of; it’s just that no one calls it that when the wealth is redistributed from the working people to the billionaire class.
It’s no secret that the modern United States has a huge wealth inequality problem. According to the St. Louis Federal Reserve, the richest 10% of Americans control about 77% of the nation’s wealth (roughly $73 trillion); the next 40% only have 22% (over $20 trillion) and the bottom 50% only have 1%, with over 164 million people collectively owning less than one trillion dollars.
The average American in 2021 is worse off than they were before the Great Recession of 2008, and it was only until January of 2020 that household incomes began to climb after the recession. However, the COVID-19 pandemic has put a stop to and reversed much of the progress made in that time. This has only come to accelerate the trend of the wealth divide between the richest few and everyone else expanding, leaving many desperate for a solution.
To put this horrific numerical divide into context: the wealth divide between the poorest and richest is worse in the modern United States than in pre-French Revolution France. In the years before the Bastille was stormed and the Ancien Régime was done away with in 1789, the richest 20% controlled about 60% of the French Kingdom’s wealth, with the other 80% of the population controlling the remaining 40% of the wealth. Isn’t it ridiculous that if the modern United States and its wealth inequality switched places with a famously despotic regime of the past, it would actually be an improvement upon our current situation?
Of course, the average American can feed, house and provide for themselves (although the amount of Americans experiencing poverty-related hunger, homelessness and financial insecurity are at historic highs). But modern America fails to live up to the standards enjoyed by other developed nations. In 2017, the top 10% of Americans controlled 47% of the wealth, whereas Western and Eastern Europe’s top 10% controlled an average of around 36%. It is safe to assume that things have only gotten worse since then.
But unlike the problem the French had in the eighteenth century, our wealthy are not kings, dukes or courtiers. But our moneyed class is not much better. America is the playground of billionaires. From meddling in popular politics to strangling the environment, the wealthy stand as the silent parasites on American society. Nowhere is this seen better than in the financial wrecking ball that was the COVID-19 pandemic.
The historic financial instability, not to mention the number of lives lost, has upended the livelihoods of millions. Ever since the start of the pandemic, the working people of the United States have lost a collective 3.7 trillion dollars in wealth, and at least half of that lost money has found its way into the pockets of 664 individuals––some of America’s finest billionaires.
So, what is to be done? We may be worse off than we were pre-2008 and even worse off than our counterparts in pre-Revolution Era France, but we are not voiceless yet. Senator Elizabeth Warren (D-MA) has proposed a new, revolutionary tax that has the ability to reverse the declining fortunes of the working class and the ability to force America’s wealthiest to contribute to the common good: Warren has proposed a wealth tax.
A wealth tax, as revolutionary an idea as it is, is quite simple: it is a tax on the total net worth of a person. Whether a sufficiently wealthy person has their money squirreled away in bank accounts, diversified among different stocks portfolios, tied up in real estate or even just sitting under a mattress somewhere, their wealth would be taxed under Warren’s plan.
Before all the people with a cool few thousand tied up in the stock market or the people who own a reasonably priced parcel of land in the suburbs get all up in arms, the likelihood is that you’ll never be on the wrong end of this tax. Warren’s plan, the Ultra Millionaire Tax (UMT), would only apply to those who have a net worth of over $50 million, making it impossible for your average Joe to be taxed for the act of owning a brand-new BMW, and it makes it impossible for the government to tax someone into poverty: someone whose net worth drops below $50 million won’t exactly starve. The UMT, according to Warren’s website, would only affect 75,000 households in the country. It would levy a yearly tax of 2% on every net worth greater than $50 million and a tax of 6% on every net worth greater than $1 billion. This tax would leave alone 99.9% of American households while making the richest 0.01% pay.
It’s not true to say that there would be no effect on the common person. In fact, it would positively affect the 99.9%. Warren and the Tax Foundation estimate that this would bring in about $2.75 trillion for the federal government over the span of ten years. Though Warren does not specify what exactly she wants the new revenue to go towards, it’s safe to assume, based on her other policy goals, that the revenue would go towards programs like free child care for kids up to five years old, taking a load off of working parents, making technical colleges and public universities free as well as establishing systems like single-payer healthcare and investing heavily in environmental projects.
What’s even more interesting is how Warren plans to enforce this tax and how she plans to publish tax dodgers. It’s no secret that the rich love to hide their money, lest it go towards helping lower-income people. Warren’s plan would see that the enforcement budget of the Internal Revenue Service (the IRS) drastically increased, so they can audit the rich more often and more thoroughly. The IRS, as it currently stands, doesn’t audit rich people at nearly the same rates as everyone else because it does not have the budget to do so. In a report released by the infamously fiscal conservative paper the Wall Street Journal, they found that the top 1% fail to report huge chunks of their assets, and because of their access to top-quality lawyers and accounting firms, are just not worth the effort of auditing- with the IRS’s current capabilities.
Some opponents of the UMT would point to wealth taxes failing in many European countries, which is true, but not the whole story. Because of the Schengen Area, which allows E.U. citizens to move freely among the member nations, it was easy for a wealthy person to just move into a country that didn’t have a wealth tax. The UMT was designed with Europe’s failures in mind. For instance, Warren's plan would include a whopping 40% tax on the wealth of people worth $50 million or more who renounce their U.S. citizenship, which some have floated as an idea that would allow the wealthy to escape U.S. taxation altogether. The U.S. is one of the only countries to tax citizens who live abroad, which makes Warren’s proposal all the sounder.
Finally, the wealth tax is popular––even among Republicans. 63% of voters think that a wealth tax is a good idea, including a slim majority (50%) of Republicans. To the dismay of Marxists across the country, there is even support for a wealth tax among the wealthy themselves: people like Facebook co-founder Chris Hughes and Disney heiress Abigail Disney have all called for a wealth tax similar to Warren’s proposal.
The simple truth is that the wealth gap isn’t going to magically disappear. The lives of average Americans may get a bit worse or stay roughly the same, but we could be so much better off if the wealthiest just paid their fair share. A wealth tax isn’t radical or on the fringes; it’s necessary. Together, let’s avoid the fate of 1789 France.