$3,000 Checks for Most Households? Lawmakers' New Billionaire Tax Plan Unveiled

Two prominent lawmakers are proposing to 'tax the rich' and send some proceeds to taxpayers. Could it be a sign of things to come? When you purchase through links on our site, we may earn an affiliate commission. Here’s how it works. Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.You are now subscribedYour newsletter sign-up was successfulWant to add more newsletters?Delivered dailyKiplinger TodayProfit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more delivered daily. 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This time, Sen. Bernie Sanders (I-Vt.) and Rep. Ro Khanna (D-Calif.) have unveiled a proposal for a 5% annual wealth tax on the richest Americans.The Make Billionaires Pay Their Fair Share Act would apply to approximately 938 billionaires in the United States, who are reportedly collectively worth $8.2 trillion.The bill’s sponsors cite compelling data on wealth inequality as a rationale for the proposal, saying "the CEOs of large corporations are now making 350 times more than their average workers" while noting that more than 60% of Americans are living paycheck to paycheck.Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special IssuesProfit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.Profit and prosper with the best of expert advice - straight to your e-mail."At a time of unprecedented income and wealth inequality, 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%."Sanders' statement came in a release regarding the proposal, which economic estimates suggest could raise $4.4 trillion over the next decade.So, should billionaires like Jeff Bezos of Amazon and Elon Musk of Tesla pay more tax? Read on to learn more.Unlike the current federal tax system, which primarily taxes wages, business income, and capital gains when assets are sold, this proposal would apply directly to the total value of assets (e.g., stock holdings, real estate, private business interests, and other investments)."We have a deep economic divide in this country," Rep. Ro Khanna said in a statement supporting the legislation. Khanna added, "On one side, places like Silicon Valley are generating extreme wealth. On the other side, families are struggling to cover the cost of health care, housing, and basic needs. We can tax billionaires a modest amount to make sure everyone has a fair chance while keeping our innovative engine."Supporters argue the proposal is designed to address what they call a structural flaw in the tax code: wealth that grows on paper — particularly stock holdings — can accumulate for years without being taxed unless sold.Beyond direct payments, bill sponsors say that if approved, the wealth tax would fund programs to expand Medicare coverage, invest in affordable housing, support child care, raise teacher pay, and improve home health care for older adults and people with disabilities, all to ease costs for working families.Those who oppose wealth tax proposals typically argue they amount to punitive taxation that could discourage investment, slow economic growth, and push high-net-worth individuals and their businesses overseas.Some policymakers warn that taxing unrealized wealth each year presents significant practical and legal challenges. Those might include figuring out how to accurately value privately held assets annually and whether such a levy would even withstand legal scrutiny.Under current law, billionaires typically pay taxes when they realize income. That might be by selling stock and triggering capital gains tax. But because much of their wealth consists of unsold stock that appreciates over time, large fortunes can grow dramatically with limited annual tax liability.For example, billionaires like Jeff Bezos of Amazon and Elon Musk of Tesla have seen their net worth rise by tens of billions of dollars in some years, largely due to stock gains.At the corporate level, both Amazon and Tesla have faced scrutiny in past years for paying little to no federal income tax during certain profitable periods.This highlights how corporate tax rules — combined with unrealized gains on stock — allow enormous wealth accumulation for billionaires like Musk.The proposed wealth tax would operate differently. Instead of waiting for stock to be sold, a 5% levy would apply annually to total net worth above $1 billion.For a billionaire worth $10 billion, that could mean a $500 million tax bill in a single year, even if they didn't sell assets.While a federal wealth tax has yet to pass Congress, some states are moving forward with legislation that would tax high earners.States including California, New York, Washington, and Minnesota have recently floated wealth taxes, capital gains levies, or surtaxes on the ultra-wealthy to help fund public services.As Kiplinger has reported, the California 5% wealth tax proposal, backed by the Service Employees International Union–United Healthcare Workers West (SEIU‑UHW) and Congressman Khanna (D-Ca.-17), but opposed by California Gov. Gavin Newsom, would apply, if approved, to individual residents with more than $1 billion in wealth as of January 1, 2026.While some similar proposals have stalled, others have evolved into narrower taxes on capital gains or high-income earners. But a broader trend is emerging: some policymakers at the state and federal levels are revisiting how extreme wealth is taxed.Whether the Sanders-Khanna proposal becomes law is far from certain. Wealth taxes face steep political hurdles in a divided Congress and almost certain legal challenges if somehow enacted.But with midterm elections approaching later this year, proposals like this can energize a political base concerned about inequality and draw contrasts on tax priorities.In any case, the debate over who really pays the most taxes and who isn’t paying their fair share continues. Stay tuned.Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.Kelley R. Taylor is the senior tax editor at Kiplinger.com, where she breaks down federal and state tax rules and news to help readers navigate their finances with confidence. A corporate attorney and business journalist with more than 20 years of experience, Kelley has helped taxpayers make sense of shifting U.S. tax law and policy from the Affordable Care Act (ACA) and the Tax Cuts and Jobs Act (TCJA), to SECURE 2.0, the Inflation Reduction Act, and most recently, the 2025 “Big, Beautiful Bill.” She has covered issues ranging from partnerships, carried interest, compensation and benefits, and tax‑exempt organizations to RMDs, capital gains taxes, and energy tax credits. Her award‑winning work has been featured in numerous national and specialty publications. State Taxes A new proposal could significantly reduce property taxes for many Florida homeowners. 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