The great pamphleteer of the American Revolution, Thomas Paine, had much more in mind than independence from the British.

Paine spent his life, Jeremy Bearer-Friend and Vanessa Williamson write in a new paperadvocating a democratic “commonwealth” that share the wealth. He wanted to free people “from both political and economic domination”.

In particular, Paine believed that a wealth tax on large private fortunes could prevent the emergence of an anti-democratic elite. This tax season, more than two centuries later, we might finally have a president who takes Paine to heart.

In its new budget proposal, the Biden administration calls for a new “billionaire minimum income tax.” The White House isn’t calling this proposal a “wealth tax,” but we should.

Under Biden’s plan, Americans worth more than $100 million would have to pay an annual tax of at least 20% on their total income — including any increase in the value of their stocks, bonds and other assets. liquids.

These liquid assets make up the bulk of every billionaire’s fortune, but increases in their value are totally untaxed until their wealthy owners decide to sell them. This gives ‘high net worth households’, the White House pointed outthe possibility that their earnings “will not be taxed for decades or generations”.

Take the example of a CEO who pockets $20 million a year in salary. He could pay a 20% tax on that $20 million.

But if that CEO also owns shares worth $10 billion and those shares gain 10% in value, or an additional $1 billion, then the vast majority of our CEO’s actual earnings would not be taxed.

According to Biden’s plan, this CEO should pay taxes on his CEO salary and all his stock market earnings. That would raise his federal tax from $4 million to $204 million.

America’s roughly 700 billionaires, the Biden administration notes, saw “their wealth grow by $1 trillion” last year. Yet under current law, billionaires pay “only 8% of their total realized and unrealized income in taxes.”

It’s true: Billionaires pay at a lower overall rate than average Americans.

“Under current law, when an American worker earns a dollar in wages, that dollar is taxed as they earn it,” the White House said. Explain. “But when a billionaire earns income because their investments increase in value, that gain is too often never taxed at all.”

Firefighters and teachers, the White House adds, “can pay double” the rate billionaires pay.

Biden’s tax plan actually takes much the same approach Tom Paine took with a wealth tax proposal he first introduced in 1792, tax historians Bearer-Friend and Williamson argue.

Under Paine’s plan, the two men calculate, today’s billionaires would pay a tax of around 3.5% on their personal wealth during normal market years. This figure is remarkably close to the tax rates that appear in the wealth tax proposals put forward by Senators Elizabeth Warren and Bernie Sanders.

Biden’s plan doesn’t take such a big bite. But it represents an important step toward taxing the wealth of America’s wealthiest, says Berkeley economist Gabriel Zucman.

Mega-billionaires Jeff Bezos, Warren Buffett and Elon Musk, Zucman reminds ustogether paid just $1.5 billion in federal income taxes during the five-year period that ended in 2018. Under Biden’s proposal, this trio would pay at least 100 times as much in course of the next decade.

Paine believed that extreme wealth undermines “the ability of citizens to choose their leaders”, argue Bearer-Friend and Vanessa Williamson, a condition many will readily recognize today. Freedom, according to Paine, “meant both lifting the poor out of scarcity and dependence” and eliminating “the vicious influence” of fiercely concentrated wealth.

Tom Paine was right. And if Congress passes Biden’s new tax plan, so can we.

Sam Pizzigati co-edits Inequality.org at the Institute for Policy Studies. His latest books include The case of a maximum wage and The rich don’t always win. This editorial was adapted from Inequality.org and distributed by OtherWords.org.