Guest columnist Al Norman: Raising the estate tax on the very richest Americans
|Published: 02-08-2024 9:22 PM
‘The greatest threat to our national security is our nation’s debt,” said Louisiana Republican Mike Johnson in his first speech in November after being elected speaker of the U.S. House. “Tough decisions will have to be made, but the consequences if we don’t act now are unbearable.”
“Over and over again,” responded Sen. Bernie Sanders, “Republicans in Washington have professed their deep concern about the national debt and yet virtually all of them have signed onto legislation that would provide a $1.8 trillion tax giveaway to billionaires by repealing the estate tax.”
If the federal government fails to expand its revenue base, the “deficit hawks” in Congress will continue blame over-expenditures on the lack of revenue. Sen. Sanders filed legislation in Congress in April 2023 — before Johnson ever dreamed of becoming speaker — called the “99.5% Act,” which imposes increased tax rates on estates, gifts, and generation-skipping transfers.
Sander’s bill establishes an estate tax on the top 0.5% of taxpayers. According to the Joint Committee on Taxation, this bill would raise $430 billion over its first decade from the richest 0.5% of families who inherit an estate over $3.5 million. Meanwhile, 99.5% of Americans who inherit less than $3.5 million would not pay one penny more in taxes.
The families of all 735 billionaires in America would pay up to $2.8 trillion more in taxes if this legislation became law. Based on the March 2023 Forbes Billionaires List, Elon Musk — at the top of the list — would pay an additional estate tax of $44.9 billion. Jeff Bezos would pay an additional $28.4 billion in estate tax. Jim, Rob, Alice and Christy Walton — the Walmart heirs — would owe a combined total of $45.5 billion in estate taxes.
The billionaires’ estate tax list includes notable Republican and Democratic activists and Hollywood stars such as Bill Gates, Warren Buffet, Michael Bloomberg, Mark Zuckerberg, Rupert Murdoch, Robert Kraft, Charles Schwab, Bernie Marcus, Arthur Blank, Ralph Lauren, George Soros, George Lucas, Mark Cuban, Steven Spielberg, Howard Schulze, Jay-Z, Donald Trump, Oprah Winfrey, Ted Turner, Michael Jordan, Kim Kardashian, and Tiger Woods.
“At a time of massive wealth and income inequality,” Sanders explains, “we need to make sure that people who inherit over $3.5 million pay their fair share of taxes … It is unacceptable that working families across the country today are struggling to file their taxes on time and put food on the table, while the wealthiest among us profit off of enormous tax loopholes and giant tax breaks.”
The billionaires’ estate tax exempts the first $3.5 million of an individual’s estate from the tax, and creates a rate structure from 45% of the value of an estate between $3.5 million and $10 million, up to 65% of the value of an estate in excess of $1 billion. The legislation also ends the loopholes for various trusts that the wealthy set up to avoid taxes, like the ones the Walton family has used for years to pass billions in stock value from one generation to the next free of any gift or estate taxes. The Walton family used “grantor retained annuity trusts” to take assets back from trusts just a couple of years after creating them, dodging gift taxes and costing the federal treasury $100 billion over the past 23 years.
The Sanders bill also protects family farmers by allowing them to reduce the value of their farmland by up to $3 million for estate tax purposes.
Sen. Sanders’ estate tax reform legislation, S.1178, is in the Senate Committee on Finance. Many Republican congressional members have chosen instead to support legislation that would completely repeal the estate tax, which they call the “death tax.” The Republican strategy has been to slash federal taxes on the rich, then complain that we don’t have the funds to support “entitlement” programs like Social Security, Medicare and Medicaid.
As early as 1910, President Theodore Roosevelt (a Republican) fought for an estate tax that would reduce the concentration of wealth. Roosevelt warned of “a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power.” Roosevelt called for “a graduated inheritance tax on big fortunes.”
The results of ignoring estate tax reform will be unbearable. Call the Congressional Switchboard at (202) 224-3121 and ask to be connected to Sen. Elizabeth Warren, who sits on the Finance Committee. Then call and ask for Sen. Ed Markey. Urge both senators to support S. 1178, the 99.5% Act, which raises the tax on estates over $3.5 million.
Al Norman of Greenfield is a regular columnist for the Recorder.