Sen. Elizabeth Warren’s wealth tax plan hasn’t gone over well with the billionaires who may run against her in the 2020 presidential race. But there once was a time when a potential billionaire presidential candidate was in favor — and, in fact, proposed — taxing the net worth of the wealthiest Americans.
His name was Donald Trump.
Before Trump’s successful White House bid in 2016, the entertainer and real estate mogul perennially floated running for president, but the only time he actually jumped into the race was his idiosyncratic campaign for the Reform Party’s presidential nomination in 2000. In a plan aimed at erasing the national debt and bolstering the credibility of his own prospective candidacy, Trump proposed a one-time 14.25 percent tax on the net worth of individuals and trusts worth more than $10 million.
“It’s a big hit for me, but I think it’s worth it,” he told CBS News after announcing the proposal in November 1999.
According to Trump’s estimates, his proposed wealth tax would have put a $725 million dent in his purported $5 billion net worth. The one-time tax was also estimated to raise a total of $5.7 trillion in revenue to wipe out the national debt — estimated to be $5.66 trillion at the time.
“No one has put forward a plan to make this country entirely debt free as we enter the next millenium [sic],” Trump said in a written statement, according to CNN. “The plan I am proposing today does not involve smoke and mirrors, phony numbers, financial gimmicks, or the usual economic chicanery you usually find in Disneyland-on-the-Potomac.”
A federal tax on net wealth is unprecedented in American history, though several European nations (Switzerland, Norway, and Spain) continue the practice today. Over the past year, the concept has gained traction among some American economists and legal experts.
According to a Warren aide, the Massachusetts Democrat’s wealth tax plan did not take any inspiration from Trump’s 1999 proposal. And there are of course some key differences.
Trump’s proposal would have been a one-time fee and exempted individuals’ principal homes from their net worth for the purposes of the tax. According to CNN, he also planned to pair the one-time tax with income tax cuts and the repeal of the estate tax on inheritances.
Warren’s wealth tax would be annual, though it would also be at a much lower rate and have a higher threshold. According to her proposal, household net wealth between $50 million and $1 billion would be taxed 2 percent each year and all wealth over $1 billion would be taxed 3 percent. And as The New York Times reported upon its release last week, taxable net worth would include all assets — including stocks, real estate, and retirement funds, held in the United States and abroad.
The Bay State senator’s plan would also increase the Internal Revenue Service’s enforcement budget to make sure and impose a 40 percent “exit tax” on the net worth above $50 million of any American citizen who renounces their citizenship after the wealth tax takes effect.
Rather than focusing on debt reduction, Warren’s proposal looks to reduce the country’s dramatic wealth inequality — which ranks higher than nearly any other developed country in the world — and “accelerate badly needed investments in rebuilding our middle class.” Economists estimate that her plan would raise $2.75 trillion in tax revenue over 10 years.
“It’s time to fundamentally transform our tax code so that we tax the wealth of the ultra-rich, not just their income,” Warren said in a statement.
Despite the differences in their respective plans (as well as the combative recent history), Trump’s rhetoric upon the release of his 1999 wealth tax nearly mirrored Warren’s current arguments about taxing the rich.
“By my calculations, 1 percent of Americans, who control 90 percent of the wealth in this country, would be affected by my plan,” Trump told CNN at the time.
Trump’s numbers may not have been exactly on point. Recent estimates actually say 90 percent of the country’s wealth is controlled by the richest 20 percent. But it was in essence the same point about wealth inequality — which has increased over the past three decades and stands to be exacerbated by the tax cut bill Trump signed in 2017 — that Warren has consistently highlighted.
“The top 0.1%, who’d pay my #UltraMillionaireTax, own about the same wealth as 90% of America,” she tweeted Tuesday. “It’s time for change.”