According to a summary of the bill released by the Patriotic Millionaires — an advocacy group that helped craft the measure — the wealth tax would have four brackets:
2% for all wealth between 1,000 and 10,000 times median household wealth;
4% for all wealth between 10,000 and 100,000 times median household wealth;
6% for all wealth between 100,000 and 1,000,000 times median household wealth; and
8% for all wealth over 1,000,000 times median household wealth;
“In the unlikely event median household wealth fell below $50,000 from its current level of about $120,000, the thresholds would be fixed at $50 million, $500 million, $5 billion, and $50 billion respectively,” the summary states. “Otherwise, the tax is not pegged to a specified dollar threshold. By design, this causes the tax to wax and wane with wealth concentration, intensifying during periods of rising inequality, but tapering off to near non-existence when median household wealth increases and inequality moderates to an acceptable level.”
The legislation would also require at least a 30% IRS audit rate on households affected by the new wealth tax, according to the summary. One recent estimate indicated that the richest Americans dodge taxes on more than 20% of their earnings, costing the federal government around $175 billion in revenue each year.
And yet low-income households have been targeted by IRS audits at a far higher rate than rich households in recent years.
In 2022, according to an analysis by the Transactional Records Access Clearinghouse at Syracuse University, “the taxpayer class with unbelievably high audit rates — five and a half times virtually everyone else — were low-income wage-earners taking the earned income tax credit.”
During the coronavirus pandemic—which killed more than a million Americans and threw the country into economic turmoil—U.S. billionaires added trillions of dollars to their collective fortunes largely tax-free.
In the first half of this year, the 500 richest people on the planet added a combined $852 billion to their net worth—an average of $14 million each day.
Morris Pearl, chair of the Patriotic Millionaires, warned in a statement Wednesday that “extreme wealth inequality has become an existential threat to our country.”
The advocacy group pointed to a 2009 paper by political scientists Jeffrey Winters and Benjamin Page, who estimated that “each of the top 400 or so richest Americans had on average about 22,000 times the political power of the average member of the bottom 90%, and each of the top 100 or so had nearly 60,000 times as much.”
“American oligarchs have used their wealth to accumulate an unprecedented level of political power, which they’ve used to amass even greater wealth,” said Pearl. “We must stop this cycle by passing the OLIGARCH Act as soon as possible.”