From the outset, several top-tier Democratic presidential candidates are pushing for new taxes on the wealthiest Americans and attempting to portray themselves as best positioned to fight the country’s yawning inequality gap.
It is an indication of how much the Democratic Party is shifting and how far the candidates are willing to go to appeal to the party’s energetic liberal faction. The debate over wealth — particularly with billionaires in the field and Democrats challenging a president whose riches helped get him to the White House — is a dominant theme of the early primary season.
Among the first advisers the candidates are consulting are not foreign affairs veterans or domestic policy experts, but economists.
Sen. Elizabeth Warren of Massachusetts is proposing a new “wealth tax” that would impose added levies on the 75,000 U.S. households with a net worth above $50 million. Sen. Kamala D. Harris of California — who also plans to unveil a proposal to increase taxes on the rich — wants to provide a tax credit of up to $500 per month to families making less than $100,000.
Sen. Bernie Sanders (I-Vt.), who in his 2016 presidential run was an early advocate for higher taxes on the wealthy, introduced a bill Thursday to significantly increase the amount heirs would pay on the estates of their wealthy relatives. Under his plan, billionaires’ estates would be taxed at a 77 percent rate, and he would also lower the estate tax threshold to those inheriting $3.5 million.
The proposals reflect a broad shift in the mood of the Democratic Party and the country more generally, as the recent financial crisis and a distrust of big institutions has fueled a populist surge in both parties. A few years ago, Democrats were shifting to the center amid concerns they had drifted too far left, and emphasizing tax hikes was anathema; now some in the party are happy to call themselves socialists.
The tax plans are jump-starting a debate within the party over how far-reaching an overhaul should be, and they’ve prompted immediate criticism from moderates and wealthy potential candidates. The Democratic field could include several billionaires, and Howard Schultz, the former Starbucks chief executive who is considering an independent bid, has dismissed some of the tax plans as unrealistic while calling Warren’s “ridiculous.”
Others say that shows a failure to grasp the political moment.
“What’s ‘ridiculous’ is billionaires who think they can buy the presidency to keep the system rigged for themselves while opportunity slips away for everyone else,” Warren wrote on Twitter. “The top 0.1%, who’d pay my #UltraMillionaireTax, own about the same wealth as 90% of America. It’s time for change.”
Michael R. Bloomberg, the billionaire former New York mayor who is considering a run as a Democrat, said Warren’s plan is probably unconstitutional, adding that there is already a disturbing model for redistributing wealth.
While Democrats have often favored increasing taxes on the wealthiest Americans, the latest proposals are pushing the limits of what was considered politically realistic just a few years ago. In the wake of the 2008 financial collapse, and a broad public sense that few of those responsible faced any consequences, liberal Democrats have increasingly focused on a broader overhaul of the system.
“It’s divisive between the classes, but that’s where we are in this point in time,” said Cornelius Hurley, a Boston University lecturer whose research has focused on the financial collapse. “Since the financial crisis, economic disparities have only gotten worse, not better. So Elizabeth Warren comes along and says, ‘Tax their wealth — not just their income, their wealth.’ ”
The reception of the various Democratic proposals will test just how much the mood has shifted and which candidate can project the right mix of anger and optimism.
The approaches of Warren and Harris, the two candidates who have been most forceful so far, have been different. Warren has argued for taxing the rich, tapping into the anger of the middle class. Harris has argued for providing tax breaks for the middle class, without yet saying how she would tax the wealthy.
“Elizabeth Warren’s approach is more punitive,” Hurley said. “And I think Kamala Harris’s approach is more inclusive and palatable across economic classes.”
Still, Harris is also likely to propose a plan that taxes the wealthy, according to her advisers. “People at the top 1 percent, people who are making $10 million a year, who have $50 million a year, they need to pay more taxes,” she said during a CNN town hall. “For too long, the rules have been working against working families and working for the benefit of the top 1 percent. We have to correct course.”
Sen. Kirsten Gillibrand of New York, who announced her candidacy two weeks ago, has not put forward specific tax proposals, but an aide said, “She supports increasing taxes for the richest.”
Sen. Cory Booker of New Jersey, who announced his presidential bid Friday, has introduced legislation giving every U.S. child a $1,000 savings bond and adding as much as $2,000 annually until age 18, a proposal aimed at reducing the racial wage gap.
Nearly two-thirds of Americans believe the U.S. economic system unfairly favors powerful interests, a figure that has changed little since 2014, according to polling from the Pew Research Center.
But the proportion of Republicans who believe the system is unfair has dropped significantly — from 51 percent in 2014 to 36 percent now — while it has increased among Democrats, from 71 percent to 84 percent.
The shift in worldview, not just in the United States but globally, was reflected in an unusually sharp speech delivered by Dutch author and historian Rutger Bregman at the recent Davos economic conference.
“Almost no one raises the real issue of tax avoidance and of the rich just not paying their fair share. It feels like I’m at a firefighters’ conference, and no one is allowed to speak about water,” he said, as the room grew palpably uncomfortable.
Dismissing the notion of inviting celebrities who talk soothingly of economic justice, he added: “Come on, we’ve got to be talking about taxes. That’s it. Taxes, taxes, taxes — all the rest is bull—-, in my opinion.”
He said in an interview that he was thinking of some of the latest policies from Ocasio-Cortez and Warren, and that a shift is underway in how policymakers talk about taxes.
A video of the talk, posted by the site NowThis News, went viral and has been viewed more than 6 million times. Sanders tweeted video of Bregman’s remarks to his 8 million followers.
“Ten years ago, it would have been unimaginable to go viral with a speech about taxes, taxes, taxes — but here we are,” Bregman said. “My main takeaway is that the window of possibility is shifting. Things are being discussed right now that were unimaginable not that long ago.”