Penn Wharton Budget Model Scores Sanders and Biden Plans to Tax the Rich—Macroeconomic Analysis Shows Offsetting Effects of Higher Tax Rates and Deficit Reduction

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PHILADELPHIA, January 23, 2020 — Calls to tax the rich are playing a prominent role in the ongoing Democratic primary. Penn Wharton Budget Model (PWBM), the nonpartisan, independent applied research organization housed at the Wharton School of the University of Pennsylvania, has analyzed the budgetary and economic effects of two proposals from Senator Bernie Sanders—a wealth tax and an expansion of the estate tax—as well as a recent plan from former Vice President Joe Biden.

The two Sanders proposals would target households with high net worth. The Sanders wealth tax would apply graduated rates up to 8 percent on those with net worth over $32 million, while the Sanders estate tax reform lowers the tax’s exemption to $3.5 million ($7 million for married couples) and creates four brackets with marginal rates up to 77 percent. PWBM projects that:

  • The Sanders wealth tax would raise between $2.8 trillion and $3.3 trillion over 10 years, about $1 trillion to $1.5 trillion less than the Sanders campaign estimates.
  • The Sanders wealth tax would decrease GDP by 1.1 percent in 2050, as disincentives to save and invest outweigh the benefits of deficit reduction.
  • The Sanders estate tax would raise an additional $267 billion over ten years, increasing the percentage of decedents affected by the estate tax to about 0.5 percent in 2030.

In contrast, the Biden plan focuses on taxing capital and corporate income. PWBM analyzed nine provisions of the Biden tax plan, projecting that:

  • The Biden tax plan would raise between $2.3 trillion and $2.6 trillion over 10 years, roughly $600 billion to $900 billion less than the Biden campaign estimates.
  • These tax increases fall mostly on the top 0.1 percent of the income distribution—on average, taxpayers in that group see their annual taxes increase by more than $1 million and their after-tax incomes fall by 14 percent.
  • The Biden plan would have little effect on the size of the economy, reducing GDP by 0.1 percent in 2030 and 2040, but increasing GDP by 0.1 percent in 2050 as the economic disincentives from higher tax rates are slightly outpaced by the benefits of deficit reduction.

For more information, read the three reports: “The Biden Tax Plan: Budgetary, Distributional, and Economic Effects,” “Senator Bernie Sanders’ Estate Tax: Projected Budgetary Effects,” and “Senator Bernie Sanders’ Wealth Tax: Projected Budgetary and Economic Effects.”

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About the Penn Wharton Budget Model

PWBM is a nonpartisan, independent applied research organization housed at the Wharton School of the University of Pennsylvania. PWBM works directly with policymakers and staff, serving as an honest broker by providing accurate, accessible and transparent economic analysis of the fiscal and economic impact of public policy without advocacy. PWBM’s estimates are regularly referenced by policymakers and top news outlets. For more information, visit

About the Wharton School

Founded in 1881 as the world’s first collegiate business school, the Wharton School of the University of Pennsylvania is shaping the future of business by incubating ideas, driving insights, and creating leaders who change the world. With a faculty of more than 235 renowned professors, Wharton has 5,000 undergraduate, MBA, executive MBA and doctoral students. Each year 13,000 professionals from around the world advance their careers through Wharton Executive Education’s individual, company-customized, and online programs. More than 99,000 Wharton alumni form a powerful global network of leaders who transform business every day. For more information, visit