WASHINGTON — U.S. Sens. Chris Van Hollen and Ben Cardin, both Maryland Democrats, want to tighten up tax loopholes leveraged by the wealthy — including billionaires such as Amazon founder and Washington Post owner Jeff Bezos, Berkshire Hathaway Chairman Warren Buffett and Tesla Motors founder and CEO Elon Musk.
A report by nonprofit media organization ProPublica showed high-profile billionaires — including Bezos, Buffett, Musk as well as financier George Soros and media mogul Michael Bloomberg — paid little or no federal income taxes in recent years, according to IRS documents.
Van Hollen and Cardin said they want to see tax changes to eliminate tax shelters and make sure middle and working class households are not paying higher rates than the rich. A push for higher taxes on the wealthy also has the support of President Joe Biden.
It comes as stock markets post record highs and the wealthiest have expanded their riches while lower-wage workers have felt the brunt of the COVID pandemic including job losses, pay cuts and evictions.
“It has long been clear that the wealthiest of the wealthy are not paying their fair share while everyday Americans shoulder the burden. That’s why I support closing a variety of tax loopholes that allow millionaires and billionaires to avoid income taxes. It’s time we fix our broken tax system to ensure everyday Americans aren’t paying a greater share of their income in taxes than the rich, and we should invest in policies that will grow prosperity and opportunity for working families across our nation,” Van Hollen said.
Van Hollen and U.S. Rep. Don Beyer, D-Va., have also introduced a federal surtax on millionaires. The tax would apply wages as well as capital gains and investment income. Democrats say the surtax would raise $634 billion in revenue over 10 years and would only impact the richest 0.2%.
Raising taxes on the rich has support from progressives as well as labor, government employees and teachers unions. They point to income inequality.
“719 billionaires hold over four times more wealth than the bottom half of the country. If that doesn’t convince you we need a wealth tax, I’m not sure what will,” said Robert Reich, a liberal economist and former U.S. labor secretary, in a social media statement.
Grover Norquist, founder and president of Americans for Tax Reform, and other conservatives oppose wealth tax and surtax proposals saying they will hurt the economy, discourage investments and potentially run into constitutional challenges. They also worry about a slippery slope leading to wealth taxes on more than just billionaires and millionaires.
The ProPublica report shows the top billionaires — including Musk, Buffett, Bezos, Soros, Facebook founder Mark Zuckerberg and Microsoft founder Bill Gates — paid an effective federal tax rate of 3.4%. That compares to 14% for a household making $70,000 per year.
A spokesperson for Cardin said the Maryland Democrat would use his position on the Senate Finance Committee to rewrite tax laws and “make sure people’s businesses play their fair share.”