If signed into law, it would be the first-ever wealth tax in the United States.
In a yellow-walled conference room at the Vermont State Capitol this week, as one attendee ate ice cream and another bounced a toddler on her lap, everyone was focused on… invoice It would be the first time in U.S. history to tax personal assets.
At the committee meeting, lawmakers took up a measure that would tax capital gains for people with a net worth of more than $10 million, even if those gains are not converted into cash.
In other words, if a wealthy person's stock or real estate holdings rise in value in a given year, that individual will have to pay taxes on the gains even if they don't sell the underlying assets.
The bill is one of a series of similar measures introduced by state-level Democrats across the country, and championed on Capitol Hill by progressives such as Democratic Sen. Elizabeth Warren of Massachusetts and independent Sen. Bernie Sanders of Vermont. We are taking up the cause.
Here's what you need to know about Vermont's proposed wealth tax and other initiatives nationwide.
How does Vermont's wealth tax work?
The wealth tax would tax capital gains for a portion of Vermont's population with a net worth of $10 million or more.
For reference, about 1,000 tax returns in Vermont involving about 2,800 people, including partners and dependents, had incomes of $1 million or more in 2022, according to Federal Reserve data. presented This week, Kirby Keaton, a nonpartisan legislative advisor to the Vermont Legislature, says:
These high earners accounted for 0.32% of tax returns, but 20% of all income paid in Vermont that year, Keaton said.
Under the proposed bill, a small number of people with a net worth of $10 million or more would pay taxes on the increase in the value of assets such as stocks, bonds and real estate.
Lawmakers are also proposing a second option. invoice It would impose a 3% tax on income earned above the $500,000 threshold.
Fair Share for Vermont, an advocacy group supporting the bill, says it could generate nearly $100 million a year in revenue, or about 5% of the state budget.
Are other states considering wealth taxes?
The nonprofit Tax Justice Initiative is pushing for wealth taxes in California, Washington and Pennsylvania, the group said in a statement. Website.
The additional requested measure would trigger a wealth tax investigation in Nevada, the group said.
The group is among a wide range of states that are campaigning for taxes on wealthy businesses and individuals, including Connecticut, Hawaii, Minnesota, Maryland and New York.
But the push at the state level has drawn opposition from some lawmakers.
In Texas, voters passed a constitutional amendment in November that would ban the possibility of a wealth or net worth tax.
In California, Democratic Gov. Gavin Newsom earlier this month rejected the idea of introducing a wealth tax to address the state's budget deficit, which has ballooned to nearly $40 billion.
Still, a wealth tax appears to have some support among Democrats at the federal level.
Last year, President Joe Biden was suggested The 2024 tax plan included a 25% tax on assets for individuals with a net worth of more than $100 million. Biden said the plan would apply to 0.01% of Americans.
