Cancellation of student loan possible if Congress does

Termination of the student loan could be funded with this one thing.

Here’s what you need to know.

Student Loans

Senator Elizabeth Warren (D-MA) knows what is. Likewise Senator Bernie Sanders (I-VT). You can also. Call it an ultra-millionaires tax or a wealth tax, and if Congress adopts this new proposal there could be enough money to make it Cancel student loan and make tuition fee-free. Sanders and Warren have two of the most vocal advocates of large-scale student loan cancellation. Now, with the introduction of the Ultra-Millionaire Tax Act in Congress, Warren has renewed her call to introduce a new tax on the richest Americans. This is how wealth tax works (note: it depends on how much wealth you have):

  • 2% annual wealth tax, or 2 cents for every dollar on assets over $ 50 million
  • 3% annual wealth tax, or 3 cents for every dollar on assets over $ 1 billion

For example, billionaires like Amazon’s

Jeff Bezos could pay $ 5 billion a year in taxes under this proposal. If you had less than $ 50 million, you would not be subject to this wealth tax. How much money could a wealth tax bring in? Answer: According to Warren, $ 3.75 trillion over 10 years. About 100,000 American families would be affected. Sanders and Warren say a wealth tax would not only increase federal government revenues from education and infrastructure, but also help reduce inequality created by the Covid-19 pandemic.

Is it worth it for canceling the student loan?

During her 2020 presidential campaign, Warren proposed a major student loan cancellation for 95% of student loan borrowers:

  • Waive $ 50,000 in student loans for anyone with a household income less than $ 100,000.
  • Offer significant debt relief to anyone with a household income between $ 100,000 and $ 250,000.
  • Make student loan cancellation tax free for borrowers.
  • Also make personal loan debt cancellable.

Today, Warren and Senate Majority Leader Chuck Schumer (D-NY) plan to cut student loans of up to $ 50,000 for borrowers with annual incomes less than $ 125,000. Warren estimates this could cost about $ 650 billion. Warren also wants the president to cancel student loans by ordinance. However, President Joe Biden said he likely will not, and will wants Congress to cancel student loans immediately. By comparison, Biden’s plan to cut $ 10,000 for student loan borrowers could cost around $ 400 billion to $ 450 billion. Warren’s property tax would easily cover the cost of both student loan termination proposals. In addition to canceling the student loan, Sanders also tabled a proposal in 2017 to make public colleges and universities toll-free, which he estimated would cost $ 600 billion over 10 years. Biden supports a similar plan to free college tuition as part of his project broader student loan modification plan. So Warren’s wealth tax could fund student loan termination and a college free of charge with several trillion dollars left.

Will a wealth tax become law?

Will a wealth tax become law? While Termination of the student loan Remaining a major priority for progressives in Congress, a property tax would have a low chance of becoming law. Democrats would struggle to find Republican support and would struggle to find support from moderate Democrats to pass laws. There are several problems related to a property tax. First, some legal scholars have raised the question of whether a wealth tax is constitutional. Second, there are potential problems associated with managing such a property tax, including the valuation of businesses and other assets. Third, it would be difficult to levy a wealth tax alone without taking account of liabilities in order to arrive at a wealth calculation. However, Warren and Sanders are confident that such a tax is not only necessary but also a key solution to many far-reaching problems such as student loans, early education, and infrastructure.

Related reading

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Termination of the student loan excluded from the new economic stimulus package

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