Rep. Pramila Jayapal (D-WA) joins Yahoo Finance’s Kristin Myers and Jessica Smith to break down the new Ultra-Millionaire Tax act proposed by her and other democratic lawmakers.

Video Transcript

KRISTIN MYERS: I want to turn now to that tax on the ultra wealthy. In the new bill that has been proposed, millionaires with net worths from $50 million to $1 billion will be taxed at a rate of 2%. Now, the proposal is set to raise roughly $3 trillion over the next decade. We have Congresswoman Pramila Jayapal and Yahoo Finance's chief political correspondent Jessica Smith here to discuss.

OK. So Congresswoman, I want to start with why you guys have chosen to go this route of taxing the ultra wealthy instead of simplifying and perhaps plugging existing holes in the tax code that allow the wealthy to lower their effective tax rate.

PRAMILA JAYAPAL: Well, thank you for having me on. The reason we're doing this is because actually, this has been a structural problem with our tax code for a long time. Because we tax income, we tax property-- that's a form of wealth-- but we really don't tax the rest of wealth until you die. And so what this is saying is people are allowed to amass wealth at enormous rates. And we saw it laid bare during the last year.

Just in the last year, billionaires in America grew $1.3 trillion richer. And we actually created 46 new billionaires even as families were struggling and lined up at food banks across the country. So this says-- look, this is a really simple proposal. It only affects the top 0.05% of Americans. That's 100,000 families that are going to get taxed $0.02 per $1 over $50 million in net worth.

Now, if you get to $1 billion, then yeah, you pay $0.03. But it's a very tiny percentage, but it brings in an enormous amount of money-- as you said, $3 trillion over 10 years. And it only affects 100,000 families. If you're in the 99.95% of Americans that don't have $50 million in wealth, then you're not going to worry about this.

JESSICA SMITH: Hi, Congresswoman. Jessica Smith here. I did want to ask about Treasury Secretary Yellen's comments that she has made saying that a wealth tax would be difficult to implement. What do you say to those concerns? And do you think the Biden administration is going to buy in?

PRAMILA JAYAPAL: Well, Jen Psaki was asked about it at the podium yesterday morning, and she didn't say no, so we take that as a good sign. In terms of Secretary Yellen's comments, it actually is something we are already doing. When people die, we value their net worth and their estates. We just do it at Death.

And so we know that doing this is absolutely something that's done, possible. But we do invest $100 billion into the IRS because we do know that to do this, particularly at the very beginning-- the first year, the first two years that we implement it, it is going to take some work to get those assets valued. But again, remember, it's 100,000 families. It's not for everyone across the country. And so we think we have the right amount of investment into the Treasury, into the IRS, as well as the right parameters to make sure that it is really limited to just that top 0.05% of the ultra wealthiest.

KRISTIN MYERS: So following on what Jess is bringing up here, how do you envision enforcement of this law, and how do you guys plan to tackle perhaps folks evading this tax and trying to essentially hide some of their wealth and some of their assets?

PRAMILA JAYAPAL: Yeah. We have a 40% exit tax. So if you suddenly decide you don't want to be in the United States, that's OK, but you've got to pay 40% as an exit tax. And we have, as I said, invested that $100 billion into the IRS because we know that enforcement is a critical issue.

And we've seen that in countries that have implemented this. If you don't invest the dollars into your enforcement arm and into your implementing arm, that does end up being a problem. So we learned from those countries and those experiences, and we incorporated all of those things into this very simple bill that would bring in $3 trillion for us to really level the playing field and have the richest in this country pay their fair share.

JESSICA SMITH: How do you go about getting moderate Democrats onboard for this? Clearly, a very, very narrow margin in the Senate, so how do you approach this as you're trying to convince people in the Senate to get onboard?

PRAMILA JAYAPAL: Well, what's been so great about this is the polling is phenomenal across the country. This is an idea that appeals to Democrats, to independents, and to Republicans. And just last night, I had two of our most swing-district Democrats come up to me and say, I want to get on that wealth tax bill because my district absolutely will love this. This is about the ultra-millionaires and billionaires. This is about people with $50 million more in wealth.

And I'll just tell you that I think the disparity, the discrepancy between people who are struggling and people who are making money off the pandemic in the last year has been too much for anyone to bear, regardless of which party you're in. So this is a fair proposal that's got tremendous popular support in all parties across the country.

KRISTIN MYERS: So Congresswoman, when we started chatting, you mentioned about how the pandemic has really exacerbated some of the wealth gaps that we have seen. And we know that the ultra wealthy have continued to get richer and richer and richer throughout this pandemic. So when I hear about this bill, I think of a two-pronged problem and this bill really tackling one prong, which is the existing wealth gap. But how do you envision tackling how, in this country, we have such a large gap to begin with, and how it has continued to grow throughout the decades?

PRAMILA JAYAPAL: Well, that is exactly why a wealth tax is really critical and income doesn't just do it. If you look at income tax and you look at-- I'm not picking on him-- I'm just bringing him up-- Jeff Bezos, who his base salary is $81,000, and you look at a nurse in Delaware-- average salary of a nurse on the front lines in Delaware is $75,000. They make about the same in income. They're going to be taxed in the same way on that income.

But we know that Jeff Bezos is the richest man in the world and has enormous wealth. But he's not paying any taxes on that until he passes away for the most part. He pays some taxes, but not a lot. So if we don't address this wealth inequality, then what happens is that wealth gets amassed at much quicker rates because you're not paying taxes on it, and then it gets passed down through inheritances. So it is left in the hands of a very, very small group of people.

That is exactly why, Kristin, we have to do the wealth tax. And it isn't a substitute for fixing the income tax system either, but it has to be done in coordination with other attempts. And it generates an enormous amount of revenue, as I said.

JESSICA SMITH: I did want to switch gears really quickly and touch on the stimulus debate that we're seeing playing out right now. I know some moderate Democrats in the Senate are pushing to lower the enhanced unemployment benefits. They're trying to tighten the eligibility on stimulus checks. And the minimum wage provision is already not going to be in the Senate bill. So are you concerned that at some point, this bill could come back to the House in a manner that you can't support any longer?

PRAMILA JAYAPAL: Well, we're still not done fighting on minimum wage. We have been telling the White House and the Senate that we think it should be included, so we're still pushing hard in every direction for the minimum wage to be included. But absolutely, I don't think-- I think it is going to be a problem if these other provisions are undermined as well.

And so I have made that very clear that we need to deliver on these survival checks. The progressive caucus prioritized minimum wage and the survival checks, and of course unemployment insurance, in what we fought for in the House bill. And we cannot afford to see that minimized because those are the things that are about money in people's pockets.

And we have said from the beginning, we have to be bold with this bill. We need to make sure we're putting money in people's pockets and that people wake up after we pass this bill and see that they actually have a chance to put food on their table and get their rent paid and still be able to go about their days. So it will be a real problem if this gets undermined in the Senate.

KRISTIN MYERS: Congresswoman Pramila Jayapal, Yahoo Finance's chief political correspondent Jessica Smith, thanks to both of you ladies for this conversation today.