Representative Tom Suozzi, one of the leaders in Congress behind the push for an expansion of the state and local tax deduction, is considering proposing a one-time wealth tax on the richest Americans.
The New York Democrat is weighing a proposal for a one-off 2.5% levy on accumulated wealth of more than $50 million and a 5% tax on assets over $100 million, according to Suozzi’s office. Rich individuals who would be subjected to the tax could pay the levy over five years. Dylan Smith, a spokesman for Suozzi, said he is still in the “exploration phase” of developing the plan.
Suozzi is calling the idea a “Patriot Tax” and says it is intended to address worsening wealth inequality that exploded during the pandemic, where wealthy individuals saw their fortunes grow while lower-income households were the most likely to face unemployment and income loss.
The tax could raise hundreds of billions of dollars in order to offset the cost of Suozzi’s proposal to lift the $10,000 limitation on state and local tax, or SALT, deductions.
The idea is a version of the wealth tax that Senator Elizabeth Warren of Massachusetts proposed during the 2020 Democratic presidential primaries as a way to address wealth inequality. President Joe Biden has largely shied away from wealth taxes, preferring to focus on raising capital gains and income rates for top-earners and overhauling the corporate tax system.
Still, Suozzi’s idea could gain traction as Democrats hunt for revenue to finance their ambitious agenda. The tax could raise about $450 billion over a decade, according to estimates from Suozzi’s office.
Progressives’ take
Suozzi and more than 20 other House Democrats from high-tax states have threatened to reject Biden’s tax plans unless they also addressed the SALT cap, which was imposed by President Donald Trump’s 2017 tax overhaul.
The White House has said that lawmakers could add SALT to legislation, but they would need to find other tax revenue to offset the cost. Some progressives, including Representative Alexandria Ocasio-Cortez of New York and Senator Bernie Sanders of Vermont, have dismissed lifting the cap, arguing it would mostly benefit the richest Americans.
Suozzi has also suggested raising the top individual tax rate to 39.6% from 37% to fund the SALT expansion, though Biden already has proposed that idea to pay for other portions of his $4 trillion economic agenda. Representative Josh Gottheimer of New Jersey, who is co-leading the SALT effort with Suozzi, has said the more generous deduction should be paid for with additional money from increased IRS enforcement efforts.
