On Monday, Sanders, an independent from Vermont, joined Representative Ro Khanna of California to introduce the Make Billionaires Pay Their Fair Share Act, legislation that would impose an annual 5 percent tax on the net worth of America’s billionaires. The proposal aims to generate an estimated $4.4 trillion over the next decade.
The tax would apply to roughly 938 individuals whose combined wealth totals about $8.2 trillion. No one with a net worth below $1 billion would be affected.
It’s also almost certainly unconstitutional. Critics argue that an annual federal wealth tax would collide with core constitutional limits on government power. They contend that a direct tax on accumulated assets — rather than on income derived from those assets — could run afoul of Article I’s requirement that “direct taxes” be apportioned among the states by population, a standard practically impossible to meet. Some also frame the proposal as an unconstitutional taking, asserting that a recurring levy on unrealized gains or static wealth effectively compels property owners to surrender assets without the procedural safeguards traditionally associated with forfeiture or eminent domain.
Sanders framed the measure as a response to what he described as historic inequality.
“At a time of unprecedented income and wealth inequality, this legislation demands that the billionaire class in America finally pay their fair share of taxes so that we can create an economy that works for all of us, not just the 1%,” Sanders said. “We can no longer tolerate a corrupt tax code that enables billionaires to pay a lower tax rate than the average worker. In a democratic society, we cannot tolerate 60% of our people living paycheck to paycheck — struggling to pay for housing, food and health care — while 938 billionaires have become $1.5 trillion richer. We cannot continue a trend in which, over the past 50 years, $79 trillion in wealth in our country has been redistributed from the bottom 90% to the top 1%. Enough is enough. Billionaires cannot have it all. It is time to enact a wealth tax on billionaires and use this revenue to address some of the major crises facing working families, the children, the elderly, the sick and the most vulnerable.”
But, it’s an idea that just doesn’t work, as anyone who has spent a few minutes thinking about it can understand.
The wealth tax, Cesar Conda argues, is less a bold innovation than a recycled warning label from history.
Writing in RealClearPolicy, Conda traces the idea back decades — to the late 1980s, when economist Ravi Batra predicted looming economic collapse driven by inequality and proposed a sweeping annual tax on large fortunes. The collapse never came. Instead, the 1990s delivered robust growth, innovation, and even federal budget surpluses. At the time, then-Sen. Robert Kasten dismissed the proposal as “economic lunacy,” warning it would depress savings, undermine investment, and fail to raise the promised revenue.
Conda contends time proved that critique correct — not just in theory, but in practice abroad.
In 1990, a dozen OECD nations imposed annual wealth taxes. Today, only a few remain. Countries such as Sweden, Germany, and France repealed or scaled back their levies after experiencing capital flight, administrative complexity, constitutional challenges, and disappointing revenue returns. Sweden scrapped its tax in 2007 after years of wealthy individuals shifting assets overseas. Germany suspended its tax following a constitutional ruling and never revived it. France’s experience, marked by an exodus of high-net-worth residents and modest fiscal gains, ended with President Emmanuel Macron narrowing the tax to real estate.
Even in countries that still maintain wealth taxes, such as Norway and Spain, revenues amount to well under 1 percent of GDP — far below the transformative sums often promised by advocates.
The pattern, Conda argues, is consistent: capital is mobile, and when taxed heavily, it moves. Argentina’s experience offered what he calls a blunt summary — “Wealth goes away and you have just the tax.”
The United States already operates a progressive tax system, with graduated income taxes, capital gains taxes, and an estate tax. The top 1 percent pays a disproportionately large share of federal income taxes. The question, Conda suggests, is not whether the wealthy contribute, but whether layering an annual wealth tax on top of the existing system would achieve its aims.
The historical record, he concludes, suggests otherwise. Wealth taxes are difficult to administer, especially when fortunes are tied up in private businesses and illiquid assets. They tend to generate less revenue than projected, distort investment decisions, and incentivize relocation. One by one, countries that experimented with them abandoned the effort.
“Bad ideas have long lives,” Conda writes. The wealth tax, in his telling, is one more example — revived regularly despite a trail of evidence suggesting it shrinks the very base it seeks to tax.
The capital flight has already begun to hit California.
