Humanity is obviously in the middle of a grave crisis that “socialist” Bernie Sanders understands. In a column recently published in the Guardian with the title “The Pandemic is helping the rich get even richer. It’s time to tax their obscene wealth,” he characterizes the current conditions as,
“an extraordinary moment in American history: a public health crisis, the worst economic downturn since the Great Depression, the existential threat of climate change and a president who is moving our country in an authoritarian direction.”
He goes on describing how,
“during the pandemic,…inequality is becoming much worse,… tens of millions of Americans are now facing economic desperation – unemployment, loss of healthcare, evictions, hunger – the very rich are becoming much richer.”
The money raised from this tax, over $435 billion, would be used “to guarantee healthcare as a right for the duration of the public health emergency” so no one “would have to pay any out-of-pocket medical bills over the next 12 months.”
Give Sanders credit for his description of the crisis (though he leaves out the existential threat of nuclear weapons.) Certainly, were his proposal to pass, many people, especially those facing health emergencies, would stand to benefit.
A big problem is that Sanders’ proposal does not provide for a permanent right to health care—something Sanders has favored for years. It could end up providing the medical industrial insurance complex with financial relief or a huge subsidy. Additionally, after paying the tax, the 467 billionaires would get to keep over
$290 billion, what Sanders describes as “the winnings a handful of billionaires [have] made during the pandemic.”
A bigger problem is that Sanders’ proposal leaves unaddressed the needs of millions of people living in poverty and enduring housing and food insecurity, all of which undermine their health and have been made worse by the pandemic.
To address the other grave problems, there is a need to tax the wealth accumulated by the 1% throughout the history of this country. For example, according to the Federal Reserve Board, since Obama’s presidency, the 1% saw their wealth increase from $14.67 trillion in the first quarter of 2009 to $36.23 trillion as of the end of 2019.
To his credit, Sanders proposed a wealth tax during his run for the presidency. If enacted, it would raise an estimated $4.35 trillion over 10 years, a large amount of money. However, it only comes to about 20% of the growth in their wealth since Obama became president until the end of 2019.
Sanders says many of the right things and is a breath of fresh air compared to practically every other major Democratic Party politician. Unfortunately, like them, he sadly falls short of putting forward proposals that address what humanity desperately needs.
1) Increases in wealth is not subject to an income tax unless the assets that represent that increase in value are sold. That is why an income tax on the super-wealthy is insufficient and rarely taxes their swelling wealth. ↑
2) As of August 19, some of the super-wealthy have experienced massive increases in the size of their wealth. Examples:
YTD Increase Total net Worth
Jeff Bezos $77.2 billion $192 billion
Bill Gates $8.13 billion $121 billion
Mark Zuckerberg $21.1 billion $99.5 billion
Elon Musk $62.4 billion $90 billion
(the increase in Musk’s wealth alone is more than California’s deficit of $54 billion)
Steve Balmer $17.4 billion $75.5 billion
4) The California Federation of Teachers has recently publicized two grossly inadequate California legislative tax proposals in an email that I received on August 12 with the title “It’s time to raise revenue by taxing those who can afford it: California’s billionaires”
AB 1253 put forward by Assemblymember Miguel Santiago would increase personal income taxes on those with incomes in excess of $1 million. It would raise an estimated $6.8 billion annually in a state that supposedly has a $54 billion deficit.
The other is AB 2088 introduced by Assemblymember Rob Bonta. It would impose a four tenths of one percent wealth tax on those with a net worth of more than $30 million. It would raise an estimated $7.5 billion a year. For a billionaire, the tax would cost $4 million a year—hardly impact what the CFT described as “the ultra-millionaires and billionaires who live in California, many of whom have actually made huge sums of money during the pandemic.” This tax might just scratch the huge sums these people have recently made and not be enough to fully address the unnecessary poverty, housing insecurity and homelessness in the state.
Noteworthy is that the .4% tax rate is less than the existing wealth tax of 1% called property taxes imposed on the price paid for real estate (that can be adjusted upward by 2% a year.) For many, this is a wealth tax not on the value of their equity (real estate wealth) since the price paid for a home often includes money borrowed to purchase the property. That means property taxes can partially be a tax on one’s mortgage debt resulting in the owner paying at a rate far in excess of 1% of their equity. For example, if one makes a down payment of $100,000 with a mortgage of $400,000 on a $500,000 house, the California property tax will be $5,000/year meaning that the tax rate is 5% of the equity in the house, or 12.5 times the AB 2088 .4% proposed wealth tax.