- Sen. Bernie Sanders introduced a new plan to increase the estate-tax rate for wealthy Americans.
- The plan, called the “For the 99.8% Act,” would lower the exemption for the estate tax to $US3.5 million and increase the top tax rate to 77% for estates with assets over $US1 billion.
- Sanders said the plan would help to combat income inequality and prevent the concentration of wealth among a select few.
- The plan adds to a growing litany of new wealth-tax ideas from Democrats, including Rep. Alexandria Ocasio-Cortez and Sen. Elizabeth Warren.
Sen. Bernie Sanders of Vermont on Thursday introduced a new plan to increase the US estate-tax rate in an effort to prevent the concentration of wealth among the US’s richest families.
The estate tax applies to the assets of a deceased person that get passed down to their heirs. A vast majority of Americans pay no estate tax because the exemption for the tax is very high. In fact, the GOP’s Tax Cuts and Jobs Act, passed at the tail end of 2017, increased the estate-tax exemption to $US11.2 million for an individual from the previous $US5.5 million threshold.
Put another way, no one pays a dime of estate tax if their assets are worth less than $US11.2 million and every dollar above that amount is then taxed at 40%. And even after that increase,Republicans are proposing an elimination of the tax altogether.
But Sanders’ plan would go the other way. The measure, named the “For the 99.8% Act,” would introduce a graduated scale for the estate tax that increases to a 77% rate for assets in excess of $US1 billion.
According to Sanders, the plan would help to combat the decadeslong wealth concentration among a small number of Americans.
“Our bill does what the American people want by substantially increasing the estate tax on the wealthiest families in this country and dramatically reducing wealth inequality,” Sanders said in a release. “From a moral, economic, and political perspective our nation will not thrive when so few have so much and so many have so little.”
Here’s the ladder of tax rates that Sanders proposed:
- Estates up to $US3.5 million are totally exempted. Sanders noted that 99.8% of Americans’ estates are under this threshold. This also returns to exemption threshold to its 2009 level and is much higher than the pre-2009 exemption level.
- 45% rate on assets between $US3.5 million and $US10 million.
- 50% rate on assets between $US10 million and $US50 million.
- 55% rate on assets between $US50 million and $US1 billion.
- 77% rate on assets above $US1 billion, which Sanders said was the top estate-tax rate from 1941 to 1976.
The plan would also close some loopholes that allow wealthy families to avoid paying estate taxes and gift taxes.
According to Sanders, the 588 US billionaires would collectively owe $US2.2 trillion in estate taxes after their deaths under the new plan, and $US315 billion in taxes would be generated over the next 10 years.
Sanders also outlined exactly how much certain wealthy people would end up paying under the new plan, when they die, of course. According to data from Sanders’ release:
- Jeff Bezos, Amazon CEO: $US131 billion net worth; $US53 billion tax bill under current estate tax; $US101 billion tax bill under Sanders’ plan.
- Bill Gates, Microsoft founder: $US96 billion net worth; $US38 billion tax bill under current law; $US74 billion tax bill under Sanders’ plan.
- Warren Buffett, Berkshire Hathaway CEO: $US83 billion net worth; $US33 billion tax bill under current law; $US64 billion tax bill under Sanders’ plan.
- Larry Ellison, Oracle founder: $US60 billion net worth; $US24 billion tax bill under current law; $US46 billion tax bill under Sanders’ plan.
- Mark Zuckerberg, Facebook CEO: $US54 billion net worth; $US22 billion bill under current law; $US41 billion tax bill under Sanders’ plan.
Sanders’ plan comes as liberal Democrats have raised several ideas for increasing taxes on the wealthy. Rep. Alexandria Ocasio-Cortez caused a ruckus with a suggestion that the top marginal tax rate should be increased to 70% for people making over $US10 million year.
Sen. Elizabeth Warren, who recently announced her candidacy for the 2020 Democratic nomination, also released a plan last week that would place a 2% tax on assets above $US50 million and a 3% tax on asset above $US1 billion.
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