A wealth tax on America's billionaires could cover the child tax credit extension — and the entire defense budget

• A new report finds that billionaires around the world hold $13.76 trillion cumulatively.
• The US has 740 of the world's 2,660 billionaires, and they hold $5.1 trillion, showing another stark wealth divide.
• Instituting a wealth tax on those billionaires could fund the child tax credit extension and the defense budget.

America's wealthiest of the wealthy have seen their ranks grow in the past five years, with pandemic wealth gains coming to $2 trillion alone for US billionaires.

And those billionaires are so rich that a wealth tax on them could fund massive parts of government spending. 

That's according to a new report from the Institute for Policy Studies, Patriotic Millionaires, Fight Inequality Alliance, and Oxfam, analyzing data from Forbes and Wealth X — and mapping out the possible repercussions of a wealth tax. The report finds that, globally, there's 2,660 billionaires. As of November 30, 2021, those billionaires hold a combined wealth of $13.76 trillion.

The US alone accounts for 740 of those billionaires, holding $5.1 trillion collectively, according to the report. That includes the $2 trillion they've accumulated during the pandemic. Those gains alone would be enough to pay off the entire $1.7 trillion student debt crisis.

The report finds that the country's wealthiest billionaire — Elon Musk, who had a net worth of $294.2 billion as of November 30, 2021 — held more wealth than the bottom 40% of the country.

It's the latest finding to illustrate the hyper-concentration of wealth among America's richest, and call into question the idea of trickle-down economics, where tax cuts for the wealthiest will eventually benefit all income levels. 

It also comes as many taxes on the wealthiest Americans have been nixed completely from Democrats' social spending plan, as negotiations over legislation like the child tax credit remain drawn out — and families are cut off from checks in the meantime. 

The report proposes one measure for evening the playing field: A wealth tax

Wealth taxes have grown in popularity throughout the pandemic, with the International Monetary Fund throwing its support behind one-off taxes on the wealthy to offset pandemic recovery. Argentina ended up doing just that, taxing the top 0.8% of its earners to pump funding into things like public health and housing. The tax ended up bringing in around $2.4 billion.

In America, a wealth tax of 2% on people holding over $5 million, 3% for those with over $50 million, and 5% for those with over $1 billion would bring in $928.39 billion annually, according to the report. Those rates are similar to Senator Elizabeth Warren's Ultra-Millionaire Tax Act, which would place a 2% tax on households holding between $50 million and $1 billion, and 3% for those with over $1 billion.

As seen in the following chart, this figure of $928.39 billion a year could cover some of the largest and most prominent parts of US federal spending. For instance, extending the child tax credit for one year would cost around $185 billion, per CBO.

But don't expect targeted taxes on America's wealthiest to come anytime soon. A proposal to tax billionaires' unrealized capital gains — the value that things like stocks accrue, and are only taxed on when they're sold — was promptly nixed hours after its announcement. The nonpartisan Joint Committee on Taxation found that Billionaires' Income Tax could raise $557 billion over ten years.