Sen. Bernie Sanders and Rep. Ro Khanna believe it would be “fair” to confiscate trillions from wealthy Americans to redistribute as they see fit. The Make Billionaires Pay Their Fair Share Act would impose a 5% annual tax on the wealth of America’s roughly 938 billionaires and is projected to raise about $4.4 trillion over ten years.
Sanders declared, “In a democratic society, we cannot tolerate 60 percent of our people living paycheck to paycheck while 938 billionaires have become $1.5 trillion richer,” arguing that the “corrupt tax code” favors the ultra-wealthy. Khanna added that “we can tax billionaires a modest amount to make sure everyone has a fair chance.” Whenever policy is driven by moral outrage rather than economic structure, you must step back and examine the unintended consequences.
A wealth tax of this magnitude targets assets, not income. That means taxing unrealized gains including paper value in stocks, private companies, real estate, and other holdings. History has shown that such taxes often trigger capital flight or relocation of high-net-worth individuals. Europe tried wealth taxes repeatedly and abandoned many of them after discovering they raised less revenue than projected while discouraging investment. Capital moves where it is treated best.
When confidence declines, redistribution becomes politically attractive. But redistribution does not create growth. It reallocates it. The real danger is not the $4.4 trillion number. It is the precedent. Once you redefine wealth as a taxable asset base regardless of liquidity, you fundamentally alter property rights. Markets function on stability and predictability and uncertainty is what drives capital away.
This proposal is unlikely to pass in its current form. Bernie will fossilize before his socialist dreams come true. Yet, ideas that were once considered extreme are now up for mainstream debate. The premise sounds good to voters on paper. Sanders and Khanna are offering “a $3,000 direct payment to every man, woman, and child in a household making $150,000 or less—$12,000 for a family of four. But as those in New York City are learning under Mamdani, tax policies eventually target EVERYONE. Socialistic policies do result in equality—in poverty—as government’s appetite for spending is insatiable.