This brief analyzes the budgetary and economic effects of Senator Sanders’ proposal to directly tax wealth of high-net worth families. Senator Bernie Sanders' Wealth Tax: Budgetary and Economic Effects Average hourly wages in the economy in 2050, including wages earned by households not directly subject to the wealth tax, would fall by 1.0 percent due to the reduction in private capital formation. PWBM projects that the proposal would reduce GDP by 1.1 percent in 2050. Including macroeconomic effects, PWBM estimates that the proposal would raise about $2.8 trillion over the same period. PWBM estimates that the proposal would raise about $3.3 trillion over fiscal years 2021-2030, not including macroeconomic effects. Senator Bernie Sanders has proposed a graduated wealth tax starting at 1 percent of net worth above $32 million and climbing to 8 percent on net worth above $10 billion, which his presidential campaign has reported as raising $4.35 trillion over 10 years. Summary: Penn Wharton Budget Model (PWBM) projects that Senator Sanders’ wealth tax proposal would raise between $2.8 trillion (including macroeconomic effects) and $3.3 trillion (not including macroeconomic effects) in additional revenue in the 10-year window 2021 - 2030 while reducing GDP in 2050 by 1.1 percent.
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