Sen. Bernie Sanders has proposed a 5% annual tax on the wealth of U.S. billionaires. Calls for a 25% minimum tax on wealthy Americans may sound similar, but they describe a different kind of tax—and a much broader group if applied to every millionaire.
Sanders and Rep. Ro Khanna introduced the Make Billionaires Pay Their Fair Share Act in March 2026. According to Sanders’ office, the proposed annual tax would apply to people with a net worth of at least $1 billion. People worth less than $1 billion would not pay the proposed wealth tax.
A wealth tax and an income tax measure different things
A wealth tax is based on the value of a person’s assets minus liabilities. An income tax generally applies to income received during a tax year. A 5% annual tax on billionaire wealth therefore cannot be directly compared with a 25% tax on income.
The Biden administration’s earlier proposal called for a 25% minimum tax on total income, generally including unrealized capital gains, for taxpayers with wealth above $100 million. It was a proposal, not a rule applying to all millionaires.
The distinction matters because owning $1 million in assets does not mean someone earns $1 million a year. A minimum tax covering every millionaire would reach many more people than either the Sanders bill or the earlier Biden proposal.
What current tax rates show
There is no single 25% federal income tax rate paid by all ordinary Americans. The federal income tax uses brackets: a person’s marginal rate applies to the next portion of taxable income, while their effective rate reflects tax paid across their income as a whole.
For 2026, the highest federal ordinary-income marginal rate is 37%. Net capital gains may be taxed at different rates, and certain higher-income taxpayers can also owe a 3.8% tax on qualifying net investment income. In general, an increase in an asset’s value is not taxed as a capital gain simply because the asset rose in price; a sale or other taxable disposition generally triggers recognition of the gain.
Why the number of millionaires needs context
UBS reported in June 2026 that the United States added more than 440,000 U.S.-dollar millionaires during 2025. Its earlier report put the U.S. total at about 24 million. These are estimates of net wealth, not a count of people earning at least $1 million in annual taxable income.
Whether the country should adopt a wealth tax or a new income-tax minimum is a policy question. The confirmed proposals have different thresholds and tax bases. Neither establishes that every millionaire currently pays less than 25%, or that every worker pays 25%.
