Musk says taxing each billionaire at 100% would barely make a dent within the nationwide debt. Bernie says tax them 5% and also you’re $3,000 richer | Fortune

The richest particular person on this planet and essentially the most well-known particular person main the trigger in opposition to creating extra folks like him have many differing views on taxing the ultrawealthy.

However now, Elon Musk and Sen. Bernie Sanders, two males on reverse ends of the ideological spectrum, are utilizing the identical math to make reverse arguments for the way a lot billionaires needs to be taxed, and the way that cash needs to be allotted.

In Musk’s view, amassing each cent billionaires rake in pales compared to federal debt, which is now hurling in direction of $39 trillion and counting.

“Even if you tax every billionaire in America at 100%, it barely makes a dent in the national debt,” Musk wrote on X in 2023. “In the end, the government will be forced to tax everyone to pay the debt.”

Sanders agrees—however he’s not seeking to tax billionaires for all their price and he’s not attempting to eradicate the debt. As a substitute, he needs sufficient to provide practically three-quarters of the nation a pleasant test, offset cuts to federal well being applications, and fund social companies. 

938 folks stand in the best way of you receiving $3,000 checks

Sanders, together with Rep. Ro Khanna, launched a billionaire tax earlier this month and recommended there are solely 938 billionaires within the nation, who, mixed, maintain a internet price of $8.2 trillion. 

Basic math would show Musk’s logic right: $8.2 trillion will barely plug a fifth of the nationwide debt. 

However that’s not what Sanders and Khanna are suggesting: the 2 put ahead the “Make Billionaires Pay Their Fair Share Act,” which proposed an annual 5% wealth tax on people with a internet price of $1 billion or extra.

Sanders estimates the invoice would generate $4.4 trillion over its first decade. And within the first yr, that income would fund a one-time $3,000 test for each American in a lower- or middle-income family, outlined as these incomes $150,000 or much less yearly, or roughly 74% of the nation.

Within the years that observe, Sanders believes the income from the tax would reverse the $1.1 trillion in Medicaid and Reasonably priced Care Act cuts, set up a $60,000 minimal wage for public college academics, and cap childcare funds at 7% of family revenue for working dad and mom.

“At a time of unprecedented income and wealth inequality,” Sanders stated within the press launch, “this legislation demands that the billionaire class in America finally pay their fair share of taxes so that we can create an economy that works for all of us, not just the 1%.”

The debt because it stands

The U.S. is paying practically $1 trillion per yr simply to service the debt—a determine that has practically tripled over 5 years and has surpassed what the federal government spends on Medicare. The Committee for a Accountable Federal Price range initiatives curiosity funds will exceed $1.5 trillion by 2032. America is, at an accelerating tempo, borrowing cash to pay curiosity on cash it already borrowed.

Musk and Sanders are making two totally different arguments. Musk’s framing casts a billionaire tax as a debt resolution, and by that measure, it fails. Sanders’ framing casts taxing billionaires as a redistribution mechanism, a option to put a refund within the pockets of working People and fund social companies. By that measure, a 5% annual wealth tax producing $4.4 trillion over a decade is important. 

Musk has warned extra broadly that America is on a path to going bankrupt “1000%” if spending isn’t curtailed. The debt disaster is structural, rooted in many years of spending that outpaces income, and no single tax can undo that. The nationwide debt has grown by greater than $11 trillion over the past 5 years alone.

However Sanders’ counter is equally pointed: the debt disaster and the affordability disaster usually are not the identical downside, and fixing one doesn’t require ignoring the opposite. A $3,000 test received’t repair the nationwide debt. However for a middle-class household barely maintaining with inflation, it might repair one thing extra rapid.