de Blasio 2020
FOR IMMEDIATE RELEASE: August 1, 2019

DE BLASIO CAMPAIGN UNVEILS FARTHEST REACHING TAX PLAN OF 2020 CAMPAIGN

NEW YORK—Mayor de Blasio yesterday unveiled a bold new tax plan that would go farther than any other 2020 candidate to rein in runaway inequality, including the most aggressive wealth tax proposal of any candidate in the field.

“There’s plenty of money in this country – it’s just in the wrong hands,” said New York City Mayor and 2020 Presidential Candidate Bill de Blasio. “A democratic society can’t survive in the face of such extreme inequalities in wealth and income, and solving that problem means that the very wealthiest Americans and corporations who have skated by for too long need to face a new reality. We need fundamental change both in society and our tax code, and my tax plan is the only plan in the Democratic field that faces up to the scale of the challenges we face.”

Thanks to a concerted, decades-long, far-right agenda that has concentrated wealth in the hands of the richest Americans and big corporations at the expense of working people, income inequality has ballooned to the point where it is not just the sign of a flawed economy, but a threat to the fabric and stability of our country. The nation’s top 1% own 40% of the nation’s wealth. Three dynastic American families – the Kochs, the Waltons, and the Mars families – have seen their wealth increase nearly 6,000% since 1982, while median household wealth has fallen by 3% during that time.

If our nation continues on its current trajectory, things won’t get any better: millennials are expected to be the first generation in American history to earn less than their parents. And far too many Americans are struggling simply to access basic services – higher education tuition is increasingly out of reach, health care is still unaffordable for millions of Americans, and the social safety net continues to erode.

Radical change is clearly required to solve the stark income and wealth disparities in our country. While many of these revenue estimates are preliminary figures, it is clear that the de Blasio Fair Share Tax Plan will not just raise revenues but restructure society.

The de Blasio Wealth Tax

A de Blasio Administration would institute the largest wealth tax of any 2020 candidate and treat massive income inequality not only as a sign of an unhealthy economy, but also as a threat to the stability and security of our democracy. The plan would place a graduated tax on assets starting at $10 million. All assets between $10 million and $25 million would be subject to an annual tax of between 1%, assets between $25 million and $100 million would be taxed at an annual rate of 2%, and all assets above that would be taxed at an annual rate of 3%. To prevent capital flight, the de Blasio Administration would also implement a “turncoat tax” of up to 40% on assets above $50 million for those who renounce their U.S. citizenship in order to avoid paying their fair share. The de Blasio wealth tax is expected to raise at least $3 trillion over 10 years.

The de Blasio Millionaires Tax

Recent studies have shown that top cumulative tax rates for the ultra rich when federal, state, and local taxes are taken into account could be as high as 70% without harming our economy. The de Blasio Administration would raise the top current tax bracket up to 40%, and then institute two new income tax brackets on high earners — a 50% tax bracket on income between $1 million and $2 million annually, and a 60% bracket on income above that level. When combined with state, local, and other taxes, top cumulative tax rates would once again approach 70%, as they did for decades prior to Ronald Reagan’s tax cuts. The plan would end the practice of allowing wealthy investors to pay a lower tax rate on capital gains than ordinary working families pay on their income. Under de Blasio’s proposal, income from capital gains will be taxed as ordinary income. Initial estimates suggest this could raise as much as $3 trillion, if not more, over the next ten years.

The de Blasio Wall Street Sales Tax

While working families pay sales taxes on everything from food to clothing, Wall Street traders can buy and sell stocks and other financial instruments without any tax. The de Blasio tax plan would level the playing field by establishing a 0.2% transaction tax on stock, bond or derivative trades, targeting high frequency traders and reducing volatility in the markets. The transaction tax is estimated to raise roughly $1.5 trillion in ten years.

The de Blasio Corporate Tax

Corporate America is enjoying record profits, sky-high stock prices—and the lowest taxes in generations. Trump and the Republicans gave corporate America a massive giveaway, cutting their taxes by 40%. Using exemptions and loopholes, many large multinational corporations pay an effective tax rate that is far lower. Sixty Fortune 500 companies paid zero federal income taxes in 2018.

The de Blasio plan would restore the corporate tax rate to 35%, where it was before Trump’s tax cuts were enacted. Additionally, the de Blasio Administration would re-institute the corporate Alternative Minimum Tax (AMT) gutted by members of both parties in the deregulatory wave of the 1990s, thereby stopping companies like General Electric from using loopholes and accounting tricks to drive their effective tax rate to zero. Lastly, the plan would equalize tax rates on profits earned offshore to remove perverse incentives for U.S. companies to move production offshore and crack down on corporate “inversions” and other schemes that allow U.S. companies to pay lower taxes on foreign profits. These changes to the corporate tax code are estimated to bring in approximately $1.3 trillion over 10 years.

The de Blasio Fair Share Tax Plan features several other pieces, including:

The de Blasio Personal Alternative Minimum Tax

A stronger AMT would prevent wealthy individuals from lowering their personal income tax rate through excessive loopholes and accounting tricks. It would be estimated to raise approximately $425 billion over 10 years.

The de Blasio Tax on Heirs and Heiresses

The growth of financial dynasties in America means that the scions of the wealthiest families aren’t just getting a leg up — they’re facing an entirely different reality from the vast majority of working people. To change this dynamic, the de Blasio Administration would replace the estate tax with a tax on inheritors’ windfalls. Heirs of inheritances over $1,000,000 would pay tax on the inheritance as income.

While estimates are preliminary, this proposal could raise as much as $500 billion, and possibly more, over the course of a decade.

The de Blasio Plan to Close Special Interest Loopholes

Too often, the wealthiest Americans and big corporations play by a separate set of rules, taking advantage of massive loopholes intended for small businesses and the middle class. The de Blasio tax plan would end these accounting gimmicks, including: (1) the “pass through” loophole worth roughly $385 billion over 10 years; (2) loopholes used by business owners that have mischaracterized the nature of their income to avoid paying health care taxes, which are worth at least $160 billion; (3) loopholes that corporations use to avoid paying taxes by paying executives using stock options, worth $45 billion; and (4) loopholes for wealthy real estate investors like Donald Trump that total $65 billion.

The de Blasio Bank Excess Risk Tax

Irresponsible financial institutions didn’t just cause the last financial crisis – many of them used the chaos of the crisis to get even bigger, and still have uninsured liabilities to this day. To hedge against another crisis, the de Blasio plan would institute a fee of .15% on their loans that are deemed risky. This would raise approximately $100 billion in the next decade.

The de Blasio CEO Pay Ratio Tax

Pay gaps between CEOs and ordinary workers have ballooned. CEOs for S&P 500 companies have seen their pay rise by $5.2 million over the last decade, while rank-and-file workers have seen their pay increase by just $7,850. The pay ratio tax would increase corporate tax rates by 0.5% for firms that pay their CEOs more than 100 times the median employee salary, and by 3% for companies that pay their CEO 400 times the median wage. This tax will bring in roughly $80 billion over 10 years.

All told, the de Blasio tax plan will raise upwards of $10 trillion over the course of the next decade.

More information about the de Blasio tax plan can be found here or on taxthehell.com.

The de Blasio Fair Share Tax Plan

We are living in an era of runaway inequality that threatens the foundation of our democracy and the unity of our nation. At the heart of this disturbing trend is a tax system that has been rigged to benefit the rich and powerful. We cannot live up to our promise as a country if we continue to accept the staggering wealth and income disparities that our tax code both embodies and enables. We cannot solve the problems that we face — from affordable housing to climate change — without rewriting the rules of our tax code to ensure that those who have benefited the most from our increasingly polarized economy pay their fair share towards the needs of the country as a whole.

Tax Runaway Inequality

Extreme Wealth Tax

Our nation’s top 1% own 40% of the nation’s wealth, and just three rich white men are worth as much as the whole bottom half of society. While the income gap between the ultra-rich and everyone else has widened to unacceptable levels, the wealth gap is even more alarming and outrageous. Income taxes alone, no matter how progressive, cannot address this dangerous concentration of resources and political power.

Bill de Blasio’s proposal is the most aggressive tax on extreme wealth of any candidate in the race. Under de Blasio’s plan, households with wealth in excess of $10 million would pay a 1% tax on assets between $10 million and $25 million dollars. Wealth of $25 million to $100 million dollars would be taxed at 2%. Assets in excess of $100 million would be taxed at 3%.

Nobody with personal family wealth of less than $10 million will pay any additional taxes under this plan.
Other elements of de Blasio’s tax plan would mirror Senator Elizabeth Warren’s plan:

• Increased funding for the IRS to effectively measure and collect a wealth tax.
• A one-time “turncoat tax” of up to 40% on assets in excess of $50 million for anyone who renounces U.S. citizenship to avoid paying the tax.

Expected Revenue: To be determined, likely in excess of $3 trillion over 10 years.

Notes: A proposal from the Institute on Taxation and Economic Policy (ITEP) called for taxing wealth in excess of $32 million at 1%. That proposal was estimated to raise $1.3 trillion over a decade. Senator Warren’s proposal, a 2% tax on assets above $50 million and 3% above $1billion, would raise an estimated $2.75 trillion over 10 years. The de Blasio Wealth Tax will raise more than either of those proposals because it starts at a lower base ($10 million) and applies the top rate of 3% to a much larger base of wealth (over $100 million).

Source: Institute on Taxation and Economic Policy (ITEP)

Tax Extreme Income

The super-rich can and should pay much more income tax than they do now. The current top income-tax rate is less than half of what it was in the middle of the last century, when income distribution was much fairer than it is today.

De Blasio’s plan would address the staggering levels of income inequality through two gigantic reforms.

First, his plan calls for taxing capital gains income at the same rate as “ordinary” income — so our tax code no longer favors wealthy investors over the workers who actually create the wealth in the first place. In addition to equalizing rates, de Blasio would close loopholes that allow wealthy investors to avoid taxation such as repealing the exclusion for capital gains on bequests, repeal like-kind exchanges, and subject derivatives to mark to market treatment.

Second de Blasio’s plan would reverse the Trump tax bill’s reduction of the top marginal tax rate, raising it to 40%. His plan would then add two new tax brackets to account for dramatic increases in income inequality. Household income between $1,000,000 and $2,000,000 would be taxed at 50%, and income in excess of $2,000,000 would be taxed at 60%. Income thresholds for individual filers would be half of those for joint filers. When combined with state and local taxes and the 3.8% Medicare tax on investment income, this will bring the total top tax rate on the richest 1% to roughly 70%.

Expected revenue: To be determined, likely to be at least $3 trillion over 10 years.

Note: According to the Institute on Taxation and Economic Policy (ITEP), equalizing capital gains and ordinary income at current income tax rates would raise $2.4 trillion over 10 years. With the significantly higher top marginal tax rate proposed by Mayor de Blasio, the total raised by equalizing capital gains and ordinary income will be significantly higher.

Source: Institute on Taxation and Economic Policy (ITEP)

Repeal the Estate Tax… And replace it with a more aggressive inheritance tax

Rather than tax the estate of deceased wealthy individuals, we should tax the living heirs and heiresses of those fortunes. Replacing the estate tax with an inheritance will be more fair and transparent. The de Blasio plan would require those who inherit over $1 million to pay tax on that inheritance at normal income tax rates.

Expected revenue: To be determined, likely to be at least $300-$500 billion over 10 years.

Note: NYU professor Lily Batchelder estimates that an inheritance tax would raise between $200 and $600 billion over 10 years depending on thresholds and rates. With a threshold of $1.2 million in value and a tax rate of the current 37.5% plus a 15% surtax, the inheritance tax would raise roughly $600 billion. The de Blasio plan would likely raise more, because it has a lower threshold of $1 million and the income would be taxed at a higher regular income tax rate of 50% – 60%.

Source: Lily Batchelder, What Should Society Expect from Heirs? A Proposal for a Comprehensive Inheritance Tax

Tax Wall Street and Big Corporations

Corporate Profits Tax

Corporate America is enjoying record profits, sky-high stock prices—and the lowest taxes in generations. Trump and the Republicans handed corporate America a massive giveaway, cutting their taxes by 40%. Using exemptions and loopholes, many large multinational corporations pay an effective tax rate that is far lower. Sixty Fortune 500 companies paid zero federal income taxes in 2018.

Huge American corporations draw on multiple public resources to help rack up their billions in profits, including the highways they use to move their goods, the schools they rely on to educate their workers, and the legal system they depend on to protect their property and patents.
From 1950 to 1970 corporate tax rates hovered around 50% — and the U.S. economy experienced one of its strongest periods of sustained economic growth.

De Blasio’s plan would restore the corporate tax rate to 35% and reinstate a strong Corporate “Alternative Minimum Tax” to prevent large corporations from using exemptions and deductions to avoid paying any corporate tax even when they rake in millions of dollars in profits.
Finally de Blasio’s corporate tax plan would equalize tax rates on profits earned offshore to remove perverse incentives for U.S. companies to move production overseas and cracking down on corporate “inversions” and other schemes that allow U.S. companies to pay lower taxes on foreign profits.

Expected revenue: $1.3 trillion over 10 years.

Source: Congressional Budget Office

CEO Pay Ratio Tax

Across the political spectrum, Americans are outraged about the extreme gaps at big corporations between CEO and worker pay. According to the AFL-CIO, the average S&P 500 CEO made $14.5 million last year. Pay for these big company CEOs has increased by $5.2 million over the past decade, compared to an increase of just $7,858 for rank-and-file workers.

A CEO Pay Ratio Tax would increase corporate tax rates from 0.5 percent on firms that pay their CEO over 100 times what median employees make to 3 percent for pay gaps of more than 400 to 1. By these rules, a 2018 Institute for Policy Studies analysis found that S&P 500 corporations alone would owe approximately $80 billion over 10 years.

Expected revenue: $80 billion

Source: Sarah Anderson and Sam Pizzigati, Inequality.org

Wall Street Sales Tax

Working families pay sales taxes on everything from a pair of shoes to a gallon of milk. But Wall Street traders can buy billions of dollars in derivatives tax free. It’s time to change that.

The de Blasio plan would assesses a 0.2% financial transactions tax on stock, bond and derivatives trades. That means just two cents for every $100 in Wall Street transactions, which would also help curb market volatility caused by high frequency trading.

Expected revenue: To be determined but roughly $1.5 trillion over 10 years

Background: CBO score of 0.1% FTT is $777B over 10 years.

Source: Congressional Budget Office

Big Bank Excess Risk Tax

De Blasio’s plan would place a small tax on the uninsured liabilities of big banks. Big irresponsible financial institutions played a key role in the economic crisis of the last decade; then, many exploited the emergency to get even bigger. President de Blasio would impose a 0.15% fee on the biggest banks based on their share of risky loans.

Expected Revenue: $103 billion over 10 years

Source: Congressional Budget Office

Comprehensive Reform To Close Loopholes and Un-rig the Tax Code

Restore The Alternative Minimum Tax

To restore a safeguard against high-income tax dodging, the de Blasio administration would reverse Trump’s weakening of the Alternative Minimum Tax (AMT). At full force, the AMT prevents the rich from using excessive deductions and exclusions to minimize or even eliminate their tax bills.

Expected Revenue: $425 billion over 10 years

Source: Joint Committee on Taxation, cited in Senate Democrats Infrastructure plan.

Repeal the “pass through” tax break

The Trump-GOP tax law’s 20% income deduction for non-corporate firms was pitched as a small-business tax break. Because business income is so highly concentrated though, it mainly benefits wealthy business owners like President Trump. Its principal impact on real small businesses, such as corner groceries and free-lance web designers, is to drain revenues from important public services like subsidized loans, infrastructure repair and income support for customers.

Expected revenue: $387 billion

Source: Joint Committee on Taxation estimate analyzed by Americans for Tax Fairness

Reinstate Healthcare Taxes

The de Blasio administration would prevent business owners from mischaracterizing the nature of their income in order to dodge taxes that support Medicare and the Affordable Care Act.

Revenue Estimate: $163-236 billion

Source: Congressional Budget Office
Congressional Budget Office

Close Real Estate Tax Loophole

No subset of American business has been showered with more tax favors over the years – including by the recent Trump-GOP tax law – than the real estate industry. President de Blasio would end the unwarranted giveaways to rich real estate investors like President Trump.

Revenue Estimate: $67 billion over 10 years

Source: Joint Committee on Taxation, cited in House Oversight Committee Report

Close CEO Executive Pay Loopholes

De Blasio’s tax plan would fully close loopholes that allow big corporations to exploit the use of stock options paid to CEOs to lower their taxes. De Blasio would fully close the CEO bonus loophole, which allows corporations to deduct executive pay from their taxes as long as payment is in the form of stock options or other “performance based” payments. He would also close the “stock options loophole” which allows corporations to calculate the cost of employee stock options one way to their investors to maximize profits — and another way to the IRS to minimize taxes.

Revenue Estimate: $45 billion over 10 years

Source: Americans for Tax Fairness Estimate