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Bernie Sanders Proposes Estate Tax of Up to 77% for Billionaires
Written by <a href="index.php?option=com_comprofiler&task=userProfile&user=50062"><span class="small">Arit John and Laura Davison, Bloomberg</span></a>   
Thursday, 31 January 2019 13:34

Excerpt: "Independent Senator Bernie Sanders is proposing to expand the estate tax on wealthy Americans, including a rate of as much as 77 percent on the value of estates above $1 billion."

Senator Bernie Sanders. (photo: Getty)
Senator Bernie Sanders. (photo: Getty)


Bernie Sanders Proposes Estate Tax of Up to 77% for Billionaires

By Arit John and Laura Davison, Bloomberg

31 January 19

 

ndependent Senator Bernie Sanders is proposing to expand the estate tax on wealthy Americans, including a rate of as much as 77 percent on the value of estates above $1 billion.

Sanders of Vermont, who’s considering a second run for president, said in a statement that his plan would apply to the wealthiest 0.2 percent of Americans. It would set a 45 percent tax on the value of estates between $3.5 million and $10 million, increasing gradually to 77 percent for amounts more than $1 billion. The current estate tax kicks in when an estate is worth about $11 million.

The legislation would raise up to $2.2 trillion in taxes from the families of all 588 billionaires in the U.S. with a combined net worth of more than $3 trillion, according to a summary of the plan.

Sanders’s plan comes as potential Democratic challengers to President Donald Trump eye progressive tax ideas intended to reduce income inequality. Senator Elizabeth Warren of Massachusetts has proposed an annual 2 percent tax on households worth more than $50 million. Sanders, who ran in the Democratic primary against Hillary Clinton in 2016, hasn’t yet said whether he’ll run in 2020.

Addressing Inequality

The estate tax exemption was $3.5 million as recently as 2009. The 2017 GOP tax overhaul increased the exemption to $11 million through 2025, and some Senate Republicans are renewing an effort to repeal the tax entirely.

While Sanders and Warren represent one approach to reducing income inequality –- breaking up concentrations of wealth among top earners –- other Democratic candidates are directing their efforts toward the lowest income brackets.

Tax Liability

Polls show that voters are becoming more receptive to the idea of increasing taxes on the wealthy. Freshman Democratic Representative Alexandria Ocasio-Cortez of New York floated a 70 percent top tax rate on incomes of $10 million or more, an idea that 59 percent of people supported in a Hill–HarrisX poll conducted Jan. 12-13.

The Sanders plan would nearly double the estate tax liability’s that some of the wealthiest Americans would owe under current law, according to calculations released by the senator along with details of the proposal. Amazon.com Inc. founder Jeff Bezos, the world’s richest man, would owe $101 billion based on his current net-worth, up from $53 billion. Facebook Inc. founder Mark Zuckerberg’s estate tax liability would jump to $41 billion from $22 billion.

The Sanders legislation would also end tax breaks for so-called dynasty trusts, estate planning tools that’ve gotten more popular under Trump’s tax law, which increased the exemption to about $22 million for a couple.

Break for Farmers

Dynasty trusts can be funded with cash, stock or other assets, and structured to pay each generation only some of the trust’s proceeds while the rest of the money grows free of estate and gift taxes. With the right planning, a trust funded up to the maximum $22.4 million tax exemption can wind up being worth far more than that.

In his plan, Sanders is including a special break for farmers, allowing them to reduce the value of their land by as much as $3 million to reduce or completely eliminate the amount of estate tax they owe. Critics of the estate tax have said land-rich, cash-poor family farmers are hurt by the tax because they don’t have the liquidity to pay the tax. However, the tax hits relatively few family-owned businesses and farms -- about 80 in 2017 -- according to the Urban-Brookings Tax Policy Center.

The estate tax exemption has been a favorite lever for Congress to adjust in recent tax legislation. The current roughly $11 million exemption for an individual has risen from $650,000 two decades ago. The winners can end up being estate tax advisers as they continually make adjustments to their client’s plans.

“The more you muck around with the exemption amount, the more you mobilize the estate planning industry and pull money into it,” said Kyle Pomerleau, an economist at the Tax Foundation, a Washington-based research group. “People will continue to shift their affairs around to game the exemption changes.”

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+3 # Rodion Raskolnikov 2019-01-31 13:55
I don't think this is the right place to focus on. It is too easy for the right wing to mis-characteriz e an estate tax. They called it a "death tax" and got a lot of public support for knocking it down.

I think a much better strategy is just to demand that rich people and corporation pay their fair share of the cost of government and government programs. The fair share could certainly include an estate tax but it would not be the centerpiece.

The point made about farmers is not really true. My parents were farmers. They bought their land very cheaply many, many years ago. They worked the land and made a living but did not get rich at all. BUT because their land was less than 10 miles from a very fast growing and opulent city, property values rose dramatically. Land speculators wanted the land for housing developments. That made land more than $20,000 an acre. But to a farmer, land can produce about $500 per acre per year. So very many farmers are losing their land to taxes, including estate taxes. The numbers above cannot be correct.

Paying a fair share is a vision everyone can support. The rich simply don't want to pay their fair share of anything -- even the wages they pay their workers.
 
 
0 # economagic 2019-02-01 21:25
I think it is EXACTLY the right place to focus on. "The Left," "Progressives," and other groupings whose members should know better, have done little more than corporate Democrats to debunk and correct such lies, such as "Moral Majority" (which was neither), "family values" (not MY family), "Pro Life" (from people who advocate state murder (aka the death penalty) and nuclear weapons. What is that line, I think from Mark Twain, to the effect that a lie travels around the world before the truth can get off its stool?

Crimes unpunished are crimes that will be repeated (not talkin' jaywalkin' here), and lies that are allowed to stand become reality for the people who have difficulty understanding which is which.

I do not understand your point about family farms. Yes, some family farms--probably many of them--have assets worth millions of dollars, much of it in land but some of it in equipment. That is the reason they would get what seems to the uninitiated to be a large exemption from the estate tax. But your example is about rising land PRICES compared to farm revenue. This is a problem everywhere "development" is taking place, not just farms, and many farms are sold at least as much for the windfall and/or the lack of an heir that wants to farm. That trend may be beginning to reverse. In any case it is a many-faceted problem, and farm policy--not just tax policy--will have to change radically along with everything else if people are still to have food.
 
 
+11 # librarian1984 2019-01-31 20:01
When we talk about reparations we're talking about the repayment of decades of manufactured inequality.

If someone steals your wages for years and then gets caught, it's not enough to punish them. The victim deserves redress.

America stole black labor for hundreds of years. It's not enough to say 'Sorry'. And come to think of it, no one has said they are sorry.

When TPTB steal our wages for forty years, when the banks steal US capital, when the MIIC steals public talent and resources for nearly a hundred years .. it's not enough to stop them. Reparations are due, and that means that these 588 billionaires need to PAY BACK the money they stole, with interest, though they can never bring back the people they've killed or allowed to die. It doesn't repair all the damage they've done, or the lives they've ruined. But it's a start.

Let these parasites who've been living off our backs for a long long time, fund the Green New Deal.

All kids in America should have the opportunity of a free college education. Why do we pay soldiers but not students? What does that say about our values?

All citizens deserve healthcare, housing, clean air and water, a living wage, a first-rate infrastructure and a functioning servile government.

Maybe these kleptocrats should pay up, smile, and be grateful we don't believe in the guillotine.
 
 
+2 # Rodion Raskolnikov 2019-02-02 07:04
librarian -- what you describe is capitalism, the practice of stealing the wealth produced by other people's labor. Before the 18th century, it was called feudalism and laborers were called serfs. We've never really freed ourselves from these conditions. Socialism, communism, and Marxism arose in order to free people from the serfdom of capitalism.

The struggle is even harder now because the capitalism have gained so much power and wealth.
 
 
+4 # lfeuille 2019-02-01 18:45
AOC started something with the 70% marginal tax proposal. Now Democrats are competing against each other with tax the rich proposals. Good. Keep it in the news. More and more people will come to see it as normal. If no one talks about it people see it as forbidden territory.
 
 
0 # Robbee 2019-02-04 18:27
Quoting lfeuille 2019-02-01 18:45:
AOC started something with the 70% marginal tax proposal. Now Democrats are competing against each other with tax the rich proposals. Good. Keep it in the news. More and more people will come to see it as normal. If no one talks about it people see it as forbidden territory.

- well put!

bernie's proposal is O U T S T A N D I N G, but clearly addresses only one third of the problem - as in estate taxes skip a generation or several, because billionaires form trusts that evade estate tax

that's why you still need a 2 or 3 % tax on mega-wealth every year, as elizabeth proposes

and to keep all millionaire earners from becoming mega-millionair es in the first place, a fairer income tax, as alexandria proposes!

all 3 tax plans are crucial, existential, to all but the point-one percenters, who we workers have carried far to long, beyond our means!

ps to bernie? how about an estate tax when someone dies? not 21 years after all of their grandkids or great-grandkids living at the time of their death? dies? like we have now?
 
 
+2 # maindrains 2019-02-02 18:02
First though something must be done to control the ability to hide money offshore... otherwise all these ideas will come to naught... the money will just vanish to some untaxable secrecy destination and the world will progress as usual.