Wealth taxes on ultra-wealthy households have been proposed by Democratic presidential candidates to fight against inequality and raise extra revenue but there is substantial uncertainty about how much revenue can be raised.
Comparing wealth taxes to income taxes shows how seemingly low rates on wealth equate to high income tax rates. Wealth taxes in European countries have had disappointing results and many have been phased out. A wealth tax would face serious administrative and compliance challenges due to valuation difficulties and tax evasion and avoidance issues.
A wealth tax would also induce foreign inflows of hundreds of billions of dollars a year to replace reductions in U.S. savings, which would cause international investors to replace home-grown billionaires as owners of capital.
| Sen. Sanders (I-VT) | Sen. Warren (D-MA) | |
| Conventional Revenue, 2020-2029 (Billions) | $3,261 | $2,636 |
| Dynamic Revenue, 2020-2029 (Billions) | $2,555 | $2,193 |
| Gross Domestic Product (GDP) | -0.43% | -0.37% |
| Gross National Product (GNP) | -1.65% | -1.15% |
| Capital Stock | -0.81% | -0.69% |
| Wealth | -10.21% | -7.19% |
| Source: Tax Foundation General Equilibrium Model | ||
2020 Democratic presidential candidates have proposed various changes to the corporate income tax to raise revenue for their policy proposals.
This includes increasing the corporate income tax rate, ranging from 25 percent to 35 percent, imposing a corporate surtax or a minimum tax, and lengthening depreciation schedules.
The effect of each of these proposals will be to increase the cost of capital in the United States, making it more expensive for businesses to make productivity-enhancing investments, and by doing so, reduce economic output, wages, and employment.
See Full Corporate tax estimate
| Fmr. Vice President Biden (D) | Fmr. Mayor Bloomberg (D) | Fmr. Mayor Buttigieg (D) | Sen. Klobuchar (D-MN) | Sen. Sanders (I-VT) | Sen. Warren (D-MA) | |
| Plan Details | 28% corporate income tax rate and 15% minimum tax on book income | 28% corporate income tax rate | 35% corporate income tax rate | 25% corporate income tax rate* | 35% corporate income tax rate and economic depreciation for all investments | 35% corporate income tax rate and 7% surtax on book income |
| Static Revenue, 2020-2029 (Billions) | $1,553 | $1,253 | $2,507 | $716 | $3,871 | $3,379 |
| Dynamic Revenue, 2020-2029 (Billions) | 1,351 | 1,093 | 2,149 | 629 | 2,689 | 2,683 |
| Gross Domestic Product (GDP) | -1.20% | -1.00% | -2.10% | -0.50% | -3.80% | -3.70% |
| Capital Stock | -2.90% | -2.30% | -5.10% | -1.30% | -9.10% | -8.70% |
| Wage Rate | -1.00% | -0.80% | -1.80% | -0.40% | -3.20% | -3.10% |
| Full-time Equivalent Jobs | -236,000 | -187,000 | -413,000 | -103,000 | -755,000 | -722,000 |
| *Sen. Klobuchar has proposed a variety of corporate tax rate increases, ranging from 25 percent to fund infrastructure improvements, 27 percent to fund deficit reduction, and 28 percent to fund child care and paid family leave, and has mentioned in debates that she would repeal the Tax Cuts and Jobs Act corporate tax rate. | ||||||
| Source: Tax Foundation General Equilibrium Model, November 2019. | ||||||
2020 Democratic presidential candidates have proposed various payroll tax changes to raise revenue and maintain solvency for major federal programs.
This includes levying Social Security payroll taxes on taxpayers with high wages, raising the Social Security payroll tax rate, and enacting new payroll taxes to fund new federal programs.
Each proposed change to payroll taxes levied on wages would make the tax code more progressive but would also reduce after-tax incomes for most wage earners. This is because employees fully bear the economic burden of payroll taxes, lowering the incentive to work and reducing economic output.
| Fmr. Vice President Biden (D) | Fmr. Mayor Buttigieg (D) | Sen. Klobuchar (D-MN) | Sen. Sanders (I-VT) | Sen. Warren (D-MA) | |
| Plan Details | 12.4% Social Security payroll tax on wages above $400,000 | 12.4% Social Security payroll tax on wages above $250,000 | 12.4% Social Security payroll tax on wages above $250,000 | 7.5% payroll tax on employers with a $2 million payroll exemption and 12.4% Social Security payroll tax on wages above $250,000 | 14.8%Social Security payroll tax on wages above $250,000 |
| Conventional Revenue, 2021-2030 (Billions) | $808 | $1,556 | $1,556 | $5,505 | $1,890 |
| Dynamic Revenue, 2021-2030 (Billions) | $657 | $1,302 | $1,302 | $4,677 | $1,573 |
| Gross Domestic Product (GDP) | -0.28% | -0.36% | -0.36% | -1.17% | -0.41% |
| Capital Stock | -0.33% | -0.42% | -0.42% | -1.33% | -0.48% |
| Full-time Equivalent Jobs | -350,400 | -462,500 | -462,500 | -1,570,000 | -532,500 |
| Source: Tax Foundation General Equilibrium Model, November 2019. | |||||
The major 2020 Democratic presidential candidates have each proposed changes to the individual income tax, one of the largest sources of federal revenue.
These proposals range from raising the top marginal income tax rate to 39.6 percent, imposing surtaxes on labor and investment income, and repealing provisions of the Tax Cuts and Jobs Act (TCJA).
See Full Individual Income tax estimate
| Biden | Sanders | |
| Plan Details | Raise 37% tax bracket rate to 39.6% | Impose a 52% tax rate on incomes over $10 million, impose a 4% income-based premium on all income, repeal the Section 199A pass-through deduction |
| Conventional Revenue, 2020-2029 (Billions of Dollars) | $109.00 | $3,168.40 |
| Dynamic Revenue, 2020-2029 (Billions of Dollars) | $84.00 | $2,169.50 |
| Gross Domestic Product (GDP) | 0% | -2.04% |
| Capital Stock | 0% | -2.54% |
| Full-time Equivalent Jobs | 0 | -1,532,000 |
| Source: Tax Foundation General Equilibrium Model, November 2019. | ||
See Full Capital Gains tax estimate
| Biden | Sanders | |
| Plan Details | Repeal step-up in basis. Raise capital gains taxes to ordinary income rates for those with >$ 1 million | Raise capital gains taxes to ordinary income rates for those with >$250,000. Institute a 4 percent income premium on capital gains |
| Conventional Revenue, 2020-2029 (Billions of Dollars | $451 | $28 |
| Dynamic Revenue, 2020-2029 (Billions of Dollars) | $418 | ($10) |
| Gross Domestic Product (GDP) | -0.03% | -0.07% |
| Gross National Product (GNP) | -0.21% | -0.20% |
| Capital Stock | -0.02% | -0.08% |
| Full-time Equivalent jobs | -400 | -41,000 |
| Source: Tax Foundation General Equilibrium Model, November 2019. | ||
What has President Joe Biden proposed in terms of tax policy changes? Our experts provide the details and analyze the potential economic, revenue, and distributional impacts.
23 min read
The Trump administration imposed nearly $80 billion worth of new taxes on Americans by levying tariffs on thousands of products in 2018 and 2019, amounting to one of the largest tax increases in decades. The Biden administration has kept most of the Trump administration tariffs in place
19 min read
If we consider Biden’s tax plan over the entire budget window (2021 to 2030) as a percentage of GDP—1.30 percent—it would rank as the 6th largest tax increase since the 1940s and and one of the largest tax increases not associated with wartime funding.
6 min read
Broad themes of the president’s agenda include providing tax relief to individuals and tax credits to businesses that engage in desired activities, while the status of expiring TCJA provisions and tariffs seems uncertain.
4 min read
While the Biden campaign is certainly focused on increasing taxes on U.S. businesses and high-income earners, it is important that policymakers also understand what that reversal might do to U.S. competitiveness, and the competitive global environment in which U.S. companies and U.S. workers operate.
3 min read
Depending on the outcome of the 2020 presidential election, we could be looking at a very different tax code in the years to come. What tax changes has former Vice President Joe Biden proposed and what would they mean for U.S. taxpayers, businesses, and the overall economy?
President Joe Biden’s tax plan would yield combined top marginal state and local rates in excess of 60 percent in three states: California, Hawaii, and New Jersey (also New York City).
4 min read
As part of President Biden’s proposed budget for fiscal year 2023, the White House has once again endorsed a major tax increase on accumulated wealth, adding up to a 61 percent tax on wealth of high-earning taxpayers.
4 min read
Investment matters across the economy, and policymaking should reflect that.
4 min read
Trump’s tariff hikes would rank as the the largest tax increase outside of wartime since 1940. Meanwhile, Harris’s tax plan would rank as the 6th largest tax increase outside of wartime since 1940.
5 min read
How does tax policy shape a nation’s competitiveness? Today, we’re diving into the showdown between the US and China, exploring how China’s enticing tax incentives pose a formidable challenge to America’s economic supremacy.
On tax policy, Harris carries forward much of President Biden’s FY 2025 budget, including higher taxes aimed at businesses and high earners. She would also further expand the child tax credit (CTC) and various other tax credits and incentives while exempting tips from income tax.
17 min read
Restoring expensing for R&D, machinery, and equipment; extending better cost recovery to structures investment; and avoiding raising the corporate tax rate would create a stronger, pro-investment policy environment for the US economy.
44 min read
In her campaign for president, VP Kamala Harris has embraced all the tax increases President Biden proposed in the White House FY 2025 budget—including a new idea that would require taxpayers with net wealth above $100 million to pay a minimum tax on their unrealized capital gains from assets such as stocks, bonds, or privately held companies.
5 min read
Short FormWorld War II shaped many aspects of the modern world, including the US tax code. But the dramatic changes to our system that military mobilization required didn’t subside when the fighting finished; they’ve persisted to today.
4 min read
When the government imposes a tariff, it may be trading jobs and production in one part of the economy for jobs in another part of the economy by increasing production costs for downstream industries.
6 min read
While both President Biden and Vice President Harris aim their proposed tax hikes on businesses and high earners, key differences between their tax ideas in the past reveal where Harris may take her tax policy platform in the 2024 campaign.
6 min read
From President Biden calling the Tax Cuts and Jobs Act the “largest tax cut in American history,” to former President Trump claiming that Biden “wants to raise your taxes by four times,” the campaign rhetoric on taxes may be sparking some confusion.
5 min read
A higher tax burden for private infrastructure investments like wireless spectrum, 5G technology, and machinery and equipment makes an existing problem worse—especially against the backdrop of outright state subsidies in countries like China.
6 min read
The agreement represents a major change for tax competition, and many countries will be rethinking their tax policies for multinationals.
8 min read
The Treasury Department recently touted strong business investment in the years following the pandemic-driven recession and pointed to the Biden administration’s industrial policies in the Inflation Reduction Act and CHIPS Act as key drivers.
7 min read
As members of Congress prepare to address the expiration of the TCJA, they should appreciate how revenues have evolved since 2017.
4 min read
The Tax Foundation is hosting an online discussion about the Section 232 tariffs on steel and aluminum, including how they work and their impacts on American jobs, wages, and prices.
The Trump administration imposed nearly $80 billion worth of new taxes on Americans by levying tariffs on thousands of products in 2018 and 2019, amounting to one of the largest tax increases in decades. The Biden administration has kept most of the Trump administration tariffs in place
19 min read
Both candidates should provide clear and honest answers about their plans (or lack thereof) to address the nation’s urgent tax policy issues.
8 min read
President Biden is proposing extraordinarily large tax hikes on businesses and the top 1 percent of earners that would put the US in a distinctly uncompetitive international position and threaten the health of the US economy.
19 min read
The government won in Moore. However, given the narrow opinion of the court and the reasoning in the Barrett concurrence and the Thomas dissent, it seems likely that future rulings under other facts and circumstances could favor taxpayers instead.
7 min read
Tariffs are a hot topic this election cycle for both President Biden and former President Trump. But why are tariffs so popular despite their economic downsides?