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Sanders Unveils US Wealth Tax

by Mike Godfrey, Washington

27 September 2019

United States Senator Bernie Sanders (D-VT), a leading contender for the Democratic presidential nomination, has proposed a new tax, as well as a series of enforcement measures, targeting America's wealthiest individuals.

The "Tax on Extreme Wealth" entails a progressive wealth tax that is proposed to apply to America's wealthiest 180,000 households.

The tax would start at a rate of one percent on wealth exceeding USD32m for a married couple, rising to:

  • Two percent on net worth from USD50m to USD250m;
  • Three percent from USD250m to USD500m;
  • Four percent from USD500m to USD1bn;
  • Five percent from USD1bn to USD2.5bn;
  • Six percent from USD2.5bn to USD5bn;
  • Seven percent from USD5bn to USD10bn; and
  • Eight percent over USD10bn.

These brackets would be halved for single taxpayers.

The tax would apply based on an annual assessment of the wealthiest Americans by the Internal Revenue Service (IRS).

The plan envisages that assets placed in a trust would be treated as owned by the grantor of the trust until that person's death.

Sanders's plan also includes a number of enforcement measures, including:

  • A national wealth registry and "significant" additional third-party reporting requirements;
  • An increase in IRS enforcement funding and a requirement that the IRS audits at least 30 percent of wealth tax returns for those in the one-percent bracket, and 100 percent of returns for all billionaires;
  • A 40 percent exit tax on the net value of all assets under USD1bn and 60 percent over USD1bn for all individuals seeking to expatriate to avoid the tax; and
  • Enhancements to the international tax enforcement and anti-money laundering regimes, including the Foreign Account Tax Compliance Act.

TAGS: individuals | Wealth | Foreign Account Tax Compliance Act (FATCA) | tax | FATCA | audit | Internal Revenue Service (IRS) | enforcement | United States | exit tax | Compliance | Tax

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