by Anna Augart-Welwood
March 29, 2021
Since human brains have not evolved to understand large numbers, it is easy to underestimate how large one billion actually is, and, therefore, it is difficult to comprehend the size of the wealth gap in America. One million seconds is eleven days, while one billion seconds is thirty-two years. One billion dollars is such an incomprehensible amount of money that it would be difficult to actually spend, and there is no reason why anyone should hoard more wealth than they could spend in their lifetime while other people are homeless, starving, and dying of curable diseases. For this reason, Congress should impose a wealth tax on the rich.
The wealth distribution in the United States is drastically unequal, and many politicians are in favor of a wealth tax to help fix this inequality. According to the Federal Reserve, the top one percent of Americans collectively own approximately one third of the U.S. household wealth. The bottom fifty percent of people in America make up only 1.9% of the country’s wealth. Racial wealth gaps are particularly astounding. As of 2016, the median white family owned almost five times the wealth of the median Hispanic family and over six times the wealth of the median black family. Senator Elizabeth Warren, along with other Democrats, recently proposed the Ultra-Millionaire Tax Act. It would place a two percent annual tax on households and trusts between fifty million and one billion dollars, in addition to a one percent annual surtax on households and trusts over one billion. The bill would help to narrow the racial wealth gap and wealth gap in general.
A poll from the New York Times in July of 2019 found that two thirds of all Americans, including 55% of Republicans, are in favor of a two percent wealth tax on everyone worth over fifty million dollars. The opinions among the people who would be paying the tax are more split. But imposing a wealth tax is not as simple as it sounds. It is difficult to determine exactly how much wealth there is in the country. Additionally, calculating revenue involves guessing how much the rich will evade the tax. Another difficult task for the Internal Revenue Service (IRS) is calculating how much people’s assets are worth. As John Koskinen, a former commissioner of the IRS, said, “The thing to remember is that really wealthy people don’t hold all their assets in easy-to-value areas like stocks and bonds. A lot of them have artwork that’s worth a lot of money. A lot of them have investments in privately held corporations or in investment vehicles that do not give regular valuations.” Enforcing a wealth tax would require the U.S. government to employ substantially more people in the IRS and determine how to calculate these valuations, seeing as bank account balances and the values of stocks and artwork fluctuate regularly.
Despite the fact that a wealth tax would be difficult to implement, it is necessary to close the wealth gap in America. The world’s top twenty-six billionaires own as much wealth as the poorest 3.8 billion people. Moreover, while millions of people were left without a steady source of income during the pandemic, billionaires got 565 billion dollars richer, making forty-two million a week on average. Some people argue that billionaires have worked hard for their money and should be allowed to keep it. However, the Billionaire Census found that 30.9% of billionaires inherited some of their wealth and that 13.3% inherited all of their wealth. Additionally, wealth inequality is self-reinforcing in the sense that people make money off their own wealth, such as through investments, giving them more wealth. And even though 55.8% of billionaires are self-made, they have more money than they could ever possibly spend. It is unfair that billionaires are hoarding money when others cannot pay for basic necessities such as food, healthcare, housing, and education. No one should be allowed to accumulate that much wealth in the first place, which is why a wealth tax would be beneficial to America. Aster Gamarnik ‘23 is in favor of a wealth tax; they say, “People shouldn’t die from something that could have been prevented if they had more money… The difference between the top and the bottom classes is so vast that poor people just can’t move up. It’s a deadly cycle of poor education, housing, and nutrition.” They believe that many aspects of our society are unfair, but since the wealth gap can certainly be narrowed, it definitely should.
While it would not be easy, implementing the Ultra-Millionaire Tax Act would be greatly beneficial to the United States. Especially during the pandemic, many people, businesses, and organizations are struggling from a lack of money. On the other hand, billionaires have profited greatly during the past year. Imagine having so much money that you could buy everything you ever wanted and still have plenty to spare. Why would you keep it to yourself when you could use it to help millions of people?
Clifford, Catherine. “The majority of billionaires in the world are self-made.” CNBC, May 10, 2019.
Ewall-Wice, Sarah. “Elizabeth Warren unveils proposal for wealth tax on “ultra-millionaires” as richest Americans see gains during pandemic.” CBS News, March 2, 2021.
Kurtzleben, Danielle. “How would a wealth tax work?” NPR, December 5, 2019.