- On Tuesday, October 15, twelve candidates participated in the fourth Democratic primary, and the wealth tax was a hot topic. Senator Elizabeth Warren and Senator Bernie Sanders had the strongest stance on the implementation of a wealth tax, while others stopped short of completely agreeing and questioned its feasibility.
- The wealthiest people in America would be substantially less rich if the United States had a wealth tax, a study published by the Brookings Papers on Economic Activity shows.
- If a moderate wealth tax had been introduced in 1982, Jeff Bezos' fortune would be half what it was in 2018. Bill Gates would be $61 billion less rich.
- A wealth tax like the one proposed by presidential candidate Sen. Elizabeth Warren would make ultra-wealthy Americans pay the federal government a small percentage of their net worth each year.
- On September 23, Bernie Sanders unveiled a wealth tax plan that is even more aggressive than Warren's.
- Visit Business Insider's homepage for more stories.
At the October 15th Democratic debate, the conversation around a wealth tax took center stage again.
Senator Elizabeth Warren has called for a 2% wealth tax on those worth more than $50 billion, a less aggressive proposal than Bernie Sanders' plan.
In response, Former Representative Beto O'Rourke sniped that "sometimes Senator Warren is more about being punitive and pitting some part of the country against each other, instead of lifting people up," after saying a wealth tax is only "part of the solution" in combating income inequality. Entrepreneur Andrew Yang noted that a wealth tax failed in European countries, like Germany. Other candidates, like Former Vice President Joe Biden and Senator Kamala Harris, proposed different income inequality solutions altogether.
The idea of using a wealth tax to solve America's inequality problem has gained traction in recent years, but proposals have been hampered by questions over the effectiveness and the constitutionality of such a tax, Business Insider previously reported.
If the United States had implemented a moderate wealth tax in 1982, however, Jeff Bezos' fortune would be half what it was in 2018 and Bill Gates would be $61 billion less rich, a study published in the Brookings Papers on Economic Activity found.
The Brookings Study, "Progressive Wealth Taxation" by The University of California at Berkeley's Emmanuel Saez and Gabriel Zucman, concludes that "the wealth tax has great revenue and wealth equalizing potential in the US context."
How a wealth tax would work
A wealth tax would require that ultra-wealthy Americans pay the federal government a small percentage of their net worth each year.
One of the most frequently cited proposals, Elizabeth Warren's "Ultra-Millionaire Tax," calls for a 2% annual tax on households with a net worth between $50 million and $1 billion and a 3% annual tax on households with a net worth over $1 billion.
The idea has support from ultra-wealthy and ordinary Americans alike: An Insider poll shows that more than half of Americans support Warren's wealth tax proposal.
And on September 23, Bernie Sanders unveiled a wealth tax that's even more aggressive than Warren's.
Keep reading to see how rich America's billionaires would be if the country had a moderate wealth tax.
Methodology: The study published in Brookings Papers on Economic Activity examines American billionaires' net worths if a moderate wealth tax had been implemented in 1982.
The date was chosen as the study's starting point because the earliest Forbes 400 data on American billionaires dates back to 1982.
The study examined how billionaires' fortunes would have been affected both by moderate and extreme wealth taxes. For the purposes of this article, Business Insider looked at the moderate wealth tax only, which would tax fortunes over $1 billion at 3%.
As the study's authors noted, "The wealth tax has a much larger cumulative effect on inherited and mature wealth than on new wealth," which helps explain the differences in how extremely some of the billionaires would be affected.
However, the study's model fails to account for the fact that ultra-wealthy Americans will likely reengineer their finances to try to evade the tax. That's a real possibility, former Department of Justice tax attorney James Mann, who is now a tax partner at law firm Greenspoon Marder, told Business Insider in August.
Warren's estimates also don't consider tax evasion, Mann said. The authors write that technological advances, the United States citizenship-based tax system, and a high exemption threshold make tax evasion less of a concern.
All data on billionaires' 2018 net worth is sourced from the Brookings study, which relied on Forbes data.
10. If the US had implemented a moderate wealth tax in 1982, Micheal Bloomberg's 2018 net worth would have been reduced by more than half.
Actual 2018 net worth: $51.8 billion
2018 net worth with a moderate wealth tax: $24.2 billion
The former Mayor of New York City, Bloomberg built his fortune running Bloomberg LP, his financial data and media company, Business Insider previously reported.
Read more: The fabulous life of Micheal Bloomberg
9. The net worth of Google founder Sergey Brin would have dropped by over a third.
Actual 2018 net worth: $52.4 billion
2018 net worth with a moderate wealth tax: $34.4 billion
Brin, 46, founded the search engine in a garage in California in 1998, Business Insider previously reported.
T8. Billionaire brothers Charles and David Koch would each have net worths nearly $35 billion lower than they were in 2018.
Actual 2018 net worth: $53.5 billion each
2018 net worth with a moderate wealth tax: $18.9 billion each
The brothers controlled industrial giant Koch Industries and are known for their donations to conservative causes. David Koch died in August after a battle with prostate-cancer, Business Insider previously reported.
6. The net worth of Google cofounder Larry Page would be down $18.5 billion.
Actual 2018 net worth: $53.8 billion
2018 net worth with a moderate wealth tax: $35.3 billion
Page, 46, is the CEO of Google parent company Alphabet, Business Insider previously reported.
Read more:The fabulous life of Google cofounder and Alphabet CEO Larry Page
5. Oracle founder Larry Ellison would be 40% less rich if the United States had a moderate wealth tax.
Actual 2018 net worth: $58.4 billion
2018 net worth with a moderate wealth tax: $23.5 billion
Ellison, 74, is also known for having a playboy reputation, Business Insider previously reported.
4. If a moderate wealth tax had been implemented, Facebook's Mark Zuckerberg would have been worth approximately only 72% of what he actually was in 2018.
Actual 2018 net worth: $61 billion
2018 net worth with a moderate wealth tax: $44.2 billion
Zuckerberg became a billionaire at age 23 after founding the social networking site, Business Insider previously reported. At the time, he was the world's youngest self-made billionaire. That title has since been taken by Kylie Jenner, whose cosmetics line made her a billionaire at age 21.
3. Warren Buffett's fortune would be one-third the size it is.
Actual 2018 net worth: $88.3 billion
2018 net worth with a moderate wealth tax: $29.6 billion
The "Oracle of Omaha" founded and serves as the CEO of conglomerate Berkshire Hathaway,Business Insider previously reported.
Read more: 7 billionaires who have Warren Buffett to thank for their fortunes
2. A moderate wealth tax would have made Bill Gates $61 billion less rich.
Actual 2018 net worth: $97 billion
2018 net worth with a moderate wealth tax: $36.4 billion
The Microsoft founder and full-time philanthropist recently faced criticism for his connections to deceased sex offender Jeffrey Epstein, Business Insider previously reported.
1. A moderate wealth tax would have cut Jeff Bezos' fortune in half.
Actual 2018 net worth: $160 billion
2018 net worth with a moderate wealth tax: $86.8 billion
Amazon founder and CEO Jeff Bezos is currently the richest person alive. However, if the United States had a wealth tax, LVMH CEO Bernard Arnault would be richer. Arnault has a net worth of $108 billion, Business Insider previously reported.