Summary: We estimate the budgetary and economic effects over the 10-year budget window (2021 - 2030) of Senator Bernie Sanders proposal for a graduated wealth tax starting at 1 percent tax on married couples’ net worth above $32 million, 2 percent tax on net worth from $50 to $250 million, 3 percent tax from $250 to $500 million, 4 percent tax from $500 million to $1 billion, 5 percent tax from $1 to $2.5 billion, 6 percent tax from $2.5 to $5 billion, 7 percent from $5 to $10 billion, and 8 percent tax on wealth over $10 billion. For unmarried individuals, the net worth cutoffs for these brackets are halved.
Table 1. Conventional and Dynamic Revenue Estimates, Fiscal Years 2021-2030
Billions of Dollars, Change from Current-Law Baseline
| Estimate type | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | Budget window |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Conventional | 259 | 326 | 315 | 306 | 298 | 314 | 338 | 365 | 396 | 428 | 3,345 |
| Dynamic | 248 | 303 | 282 | 263 | 248 | 257 | 272 | 291 | 311 | 334 | 2,809 |
Table 2. Economic Effects of a Wealth Tax
Percent Change from Baseline
| Year | GDP | Capital stock | Average Hourly Wage | Hours Worked |
|---|---|---|---|---|
| 2030 | -0.8% | -1.9% | -0.6% | 0.1% |
| 2040 | -1.0% | -2.6% | -0.8% | 0.2% |
| 2050 | -1.1% | -2.9% | -1.0% | 0.3% |
Note: Consistent with empirical evidence, the projections above assume that the U.S. economy is 40 percent open and 60 percent closed. Specifically, 40 percent of new government debt is purchased by foreigners.