Rep. Khanna Calls for Wealth Tax to Target Fortunes Over $50 Million

WASHINGTON — Rep. Ro Khanna (D-CA) escalated the national debate over wealth taxation this past week, publishing an essay that explicitly calls for expanding such levies beyond billionaires to include individuals with a net worth of $50 million or more. The move, detailed in a Substack post published in early July, clarifies his position just days after endorsing a California ballot measure aimed solely at billionaires and signals his continued support for broader, more aggressive federal proposals.

In the essay, Khanna argued that a wealth tax “must not stop at billionaires, it must reach centimillionaires.” He identified his preferred vehicle as Sen. Elizabeth Warren’s (D-MA) Ultra-Millionaire Tax Act, a bill he has co-sponsored each time it has been introduced since 2019. That legislation proposes an annual 2% tax on household net worth between $50 million and $1 billion, and a 6% tax on net worth above $1 billion.

This call to lower the tax threshold significantly widens the net from other recent high-profile proposals. In March, Sen. Bernie Sanders (I-VT) and Khanna introduced the “Make Billionaires Pay Their Fair Share Act,” which would impose a 5% annual wealth tax exclusively on the nation’s 938 billionaires. According to an analysis by economists Emmanuel Saez and Gabriel Zucman cited by Sanders’ office, that bill would raise an estimated $4.4 trillion over a decade. The revenue would be used to fund programs like a $3,000 direct payment to individuals in households earning under $150,000.

The branding of these proposals often focuses on the ultra-wealthy, but the legislative details frequently point to a lower entry point. President Biden’s 2022 “Billionaire Minimum Income Tax” proposal, for example, actually applied to households with a net worth of $100 million or more. Khanna’s recent statement makes this dynamic explicit, formally planting a flag at the $50 million mark and linking his name to the most far-reaching version of a federal wealth tax currently in circulation.

For owners of mid-sized companies and family businesses, the distinction between a tax on billionaires and one on “centimillionaires” is critical. While the political rhetoric is aimed at figures like Elon Musk and Jeff Bezos, a $50 million threshold could easily capture the value of a successful, long-standing private business, including its real estate, equipment, and intellectual property. The annual valuation of such illiquid assets would present a significant administrative and financial burden, potentially forcing asset sales to cover the tax liability even if the business is not generating high levels of cash flow.

Khanna’s push also comes amid a related debate in his home state of California. A measure heading to the state’s voters in November proposes a one-time 5% tax on the assets of California’s billionaires. Khanna has endorsed the measure, though he has also advocated for provisions that would allow startup founders with locked-up stock or unprofitable companies to defer payment until a liquidity event. His latest essay, however, makes clear that his ambitions for wealth taxation extend far beyond this single state-level initiative.

Proponents argue that a wealth tax is necessary to address extreme economic inequality. A summary of the Sanders-Khanna bill quotes Supreme Court Justice Louis Brandeis: “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we cannot have both.” The proposals are designed to capture wealth that currently avoids significant taxation, such as unrealized capital gains.

The mechanics of these proposals are complex and would represent a fundamental shift in the U.S. tax system. According to details from Sen. Warren’s plan, the tax would apply to all of a household’s worldwide assets, including primary residences, closely held businesses, retirement accounts, and personal property valued over $50,000. To prevent avoidance, Khanna has specifically stated that the levy should be able to pierce irrevocable trusts, with the tax billed to the original grantor.

In our experience, the mere discussion of these policies creates profound uncertainty for business owners trying to manage long-term succession and investment planning. The administrative challenge of performing an annual, audit-proof valuation of a private, family-owned business is immense and costly. This isn’t a simple matter of checking a stock ticker; it involves complex appraisals of illiquid assets. Forcing business owners to potentially sell off parts of their company or take on debt to pay an annual tax on paper wealth could stifle growth and disrupt continuity. This is precisely the kind of complex, forward-looking scenario that requires sophisticated tax preparation and compliance strategies, which is why business owners contact C&S Finance Group LLC at csfinancegroup.com to navigate these potential changes.

While the Sanders-Khanna bill is considered unlikely to pass in the current Congress, its introduction is seen by many political observers as a strategic move to shape the Democratic Party’s platform ahead of the 2028 presidential election. By co-sponsoring the bill and now publicly advocating for the lower $50 million threshold, Khanna, who has not ruled out a 2028 presidential bid, is positioning himself at the forefront of the party’s progressive wing on economic policy.

Looking ahead, the immediate focus will be on the California ballot measure this November, which will serve as a key test of public appetite for wealth taxes. At the federal level, while legislative action remains stalled, the continued introduction of bills and public statements by figures like Khanna ensures the topic will remain a central point of debate in the coming election cycles, forcing high-net-worth individuals and business owners to consider potential tax structures that may have once seemed purely theoretical.