Why Elizabeth Warren sees a wealth tax as one solution to the ‘suffering’ of a K-shaped recovery

In an interview with CNBC, Sen. Elizabeth Warren said the US is “suffering” from a K-shaped recovery — and again identified a wealth tax as one way to address inequality.

“We’ve been talking about wealth inequality in this country for several years now,” Warren said. “This pandemic could accelerate it at a rate that we had never even imagined in our worst nightmares.”

In a K-shaped recovery, which has so far been the shape of America’s recession rebound, high earners have seen their incomes and jobs bounce back. The opposite is true for low-wage workers. In fact, the pandemic has had a devastating effect on America’s most vulnerable workers.

Warren said stimulus checks are one way to get money to people who need it — and to get more money into the economy. And when it comes to solving inequality, Warren said a wealth tax is a way to “build a future.”

“A two-cent tax on the top one tenth of 1% of families in this country would permit us to fund universal child care for all of our babies, and so that all of their mamas and daddies could finish their education, be able to go to work,” Warren said on CNBC. “It would let us invest in K-12 for our kids. It would let us invest in universal free college. It would let us get rid of our student loan debt.” 

Warren has long been a proponent of the wealth tax, with both her and Sen. Bernie Sanders pushing for it during their respective presidential campaigns.

During Warren’s campaign, the idea of a wealth tax was popular. An Insider poll in February 2019 found that 54% of Americans supported Warren’s proposal, which would levy a 2% tax on assets over $50 million, with an additional 1% tax on assets over $1 billion.

At the time, more moderate Democrats began to come around to the idea of a wealth tax — although future President Joe Biden did not outright express support for the measure. His eventual tax plan did end up targeting high-earners, but did not include a wealth tax.

While Sanders and Warren’s wealth tax proposals still seemed far-fetched to some, despite their popularity, more countries and communities have been getting serious about wealth taxes during the pandemic.

Argentina implemented a one-time wealth tax to cover coronavirus equipment and supplies; 83 millionaires in the United States have asked to be taxed to cover similar costs. 

Even prior to the pandemic, many American billionaires and millionaires had signaled their support for a wealth tax.

And bodies like the International Monetary Fund — which previously advocated for tax cuts — recommended governments consider a wealth tax, as Insider’s Joseph Zeballos-Roig reported. A recent Oxfam report on inequality also highlighted wealth taxes as one possible solution for solving inequality.

Even New York City Mayor Bill De Blasio has spoken out in support of a wealth tax, saying in his final State of the City address that New York billionaires have seen gains in the billions.

“There is clearly enough money in New York to invest in a fair and fast recovery — it’s just in the wrong hands,” he said. He called for new progressive income taxes, and a billionaires’ tax.

On CNBC, Warren framed the wealth tax as an investment in the future of the country.

“A two-cent wealth tax changes this country fundamentally because it means we say as a nation, we are going to invest in the next generation. We’re going to invest in creating opportunity not just for a handful at the top, we’re going to create opportunity for all of our kids,” she said. “That’s how we build a strong future in this country.”