40 THE QUEENS COURIER • OCTOBER 24, 2019 FOR BREAKING NEWS VISIT WWW.QNS.COM
TAX TIPS
Billionaires Could
Face Tax Rates
Up to 97.5%
Under Sanders
BY JOHN SAVIGNANO, CPA
Billionaires may have much more to fear from a Bernie
Sanders presidency than they do from an Elizabeth Warren
administration, according to two economists advising both
candidates.
That’s one of the conclusions of a new interactive website
developed by University of California, Berkeley professors
Emmanuel Saez and Gabriel Zucman.
If Sanders had his way, they calculate that the 400 richest
Americans, on average, would have an effective tax rate of
97.5%. That includes not only their income, but also a wealth
tax that whittles away at the family fortune.
The 97.5% average effective tax rate under his plans compares
with 23% now and 62% under Warren’s proposals, according
to the two economists.
Sanders and Warren have both pitched wealth taxes, which is
a key reason that their plans tax billionaires so much more.
Warren’s wealth tax places a 2% levy on fortunes above $50
million and a 3% levy on assets more than $1 billion. Sanders’
plan goes further, and starts taxing wealth of $32 million at 1%,
increasing to an 8% tax on fortunes above $10 billion.
“With the wealth tax, you get directly at the stock instead of
hitting the flow of income, making it a much more powerful
de-concentration tool than income taxes,” Saez said in an email
about Sanders’ tax, which Sanders has said would cut the
number of billionaires in the country in half in 15 years.
The calculations by Saez and Zucman cover state, local and
federal taxes and also treat health insurance premiums that
individuals pay as a tax, arguing that they are one of main
drivers of inequality in the U.S.
If a Democrat wins in 2020, wealthy Americans would fare
best if it were Joe Biden, even though the former vice president
would hit the rich with a markedly bigger tax burden -- an
effective average rate of 30.6%, or more than 7 percentage
points higher than they face now under President Donald
Trump.
Large tax increases on the rich have been a key topic in the
2020 Democratic primary as candidates have looked for
proposals that would lessen inequality and raise lots of revenue
to pay for expensive social programs, such as expanded health
care and free college tuition.
All major Democratic candidates have called for higher taxes
on the wealthy, including raising the income tax rates or
increasing levies on capital gain income. Sanders, Warren and
Senator Kamala Harris have also floated levies on stock and
bond trades.
Taxes on the wealthy have historically been popular with
voters. For decades a majority of polls have shown that people
think the wealthy pay too little in taxes. Gallup found in April
that 62% of people say that “upper-income” individuals pay too
little in taxes.
John Savignano is a partner with Savignano Accountants &
Advisors located at 47-46 Vernon Blvd., Second Floor, in Long
Island City. If you have any questions or require additional
information, please call John at 718-707-0955.
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