Senator Bernie Sanders (I-VT) introduced a new bill Thursday that would slap a one-time 60% tax on the riches U.S. billionaires, many of them tech billionaires, have accumulated after the COVID-19 pandemic hit the U.S. in mid-March.
If the bill, called the Make Billionaires Pay Act, was signed into law, Jeff Bezos would owe Uncle Sam $42.6 billion on the whopping $71 billion in wealth he’s accumulated since mid-March. Mark Zuckerberg would owe $22.8 billion on the $38 billion he’s made. Elon Musk would owe $27.6 billion on his $46 billion in gains.
In all, the bill would tax 467 of the country’s 650 billionaires, which the bill’s signatories say have cumulatively become $732 billion richer during the pandemic. It would raise $422 billion to pay for the “out-of-pocket medical expenses of all the uninsured and the under-insured Medicare beneficiaries over the next 12 months,” Sanders’s office says.
Sounds good in principle, and it certainly satisfies the populist urges of many Americans. But the calculus used to figure the taxes owed isn’t quite fair.
The net worth of the billionaires who would pay the tax is based in large part on their stock market holdings, and the markets began tumbling well in advance of the mid-March shutdown, as Marketwatch reporter Steve Goldstein pointed out in May. The Dow Jones and the S&P 500 indexes show the market beginning a steep dive around February 20 as the virus began to descend on the U.S. The dive bottomed out right around mid-March, just when Bernie’s bill (based on data from Forbes, and the progressive group Americans for Tax Fairness) begins tracking the billionaires’ “growth.” Most of that growth is really just the markets recovering and the billionaires recouping their losses during the February market crash.
A fairer way to measure the effect of coronavirus on the wealth of billionaires would be to start tracking at the point their wealth started to be impacted, for better or for worse. That would be in February.
Even then, some billionaires, like Bezos, could be subject to the tax, because they are in fact worth more today than they were when the markets began tanking. But many more of the 467 billionaires would show no gains, and the proceeds of the tax would be far less.
If Bernie’s bill makes it to a committee or open floor discussion, this flaw will certainly be criticized. Even if the bill’s method of calculating wealth were changed in committee, it’s hard to imagine it getting anywhere near the president’s desk in a highly polarized and GOP-controlled Senate.
Asking the wealthy to do more to help the needy in a time of national crisis is a reasonable idea, but painting billionaires as coronavirus profiteers is no way to start the conversation.