Proposed wealth tax ‘sounds lovely’ but ‘doesn’t make any sense’
Progressive lawmakers want to implement a wealth tax to reduce economic inequality, but financial advisors doubt that levying taxes based on assets would work.
Just before Congress left Washington last week for its summer recess, several Democratic lawmakers introduced the Oppose Limitless Inequality Growth and Reverse Community Harm Act. The measure would impose tax brackets ranging from 2% to 8% on wealth that is 1,000 to 1 million times the median household wealth. The tax would amount to roughly 2% on $100 million to 8% on $120 billion, assuming median household income is $120,000.
The bill’s sponsors — Democratic Reps. Summer Lee of Pennsylvania, Barbara Lee of California, Jamaal Bowman of New York and Rashida Tlaib of Michigan — said that wealth disparity in the U.S. is growing and that those with greater means also have much more political influence than people in lower economic strata.
“Inequality in the United States is worse in 2023 than it was during the Gilded Age,” Rep. Barbara Lee said in a statement. “It is unacceptable that millions of hardworking people remain impoverished, while the top 0.1% hold over 20% of the nation’s wealth. The Oligarch Act is the solution we need to close the exorbitant wealth gap in America and create a tax system where everyone pays their fair share.”
The bill reignites a debate about taxing wealth rather than income to generate more revenue from individuals and families with massive financial assets. That conversation also is occurring at the state level, where legislators introduced several wealth-tax bills earlier this year.
But financial advisors expressed doubt that the approach is viable.
“It’s almost impossible to administer,” said Dick Power, owner of Power Plans, an
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