- 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 $3.5 million and increase the top estate tax rate to 77% for estates with assets over $1 billion.
- Sanders said that the plan would help to combat income inequality and prevent the concentration of wealth among the 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 as it gets passed down to their heirs. A vast majority of Americans pay no estate tax since 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 $11.2 million for an individual from the previous $5.5 million threshold.
Put another way, no one pays a dime of estate tax if their assets are worth less than $11.2 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 $1 billion.
According to Sanders, the plan would help to combat the decades-long 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 rate that Sanders proposes:
- Estates up to $3.5 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 $3.5 million and $10 million
- 50% rate on assets between $10 million and $50 million
- 55% rate on assets between $50 million and $1 billion
- 77% rate on assets above $1 billion, which Sanders notes was the top estate tax rate from 1941 to 1976.
The plan would also close some estate and gift tax avoidance loopholes that allow wealthy families to avoid paying.
According to Sanders, the 588 US billionaires would owe $2.2 trillion in estate taxes under the new plan and $315 billion over the next ten 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: $131 billion, current net worth; $53 billion tax bill under current estate tax; $101 billion tax bill under Sanders' plan
- Bill Gates, Microsoft founder: $96 billion net worth; $38 billion tax bill under current law; $74 billion bill under Sanders' plan
- Warren Buffett, Berkshire Hathaway CEO: $83 billion net worth; $33 billion bill under current law; $64 billion bill under Sanders' plan
- Larry Ellison, Oracle founder: $60 billion net worth; $24 billion bill under current law; $46 billion bill under Sanders' plan
- Mark Zuckerberg, Facebook CEO: $54 billion net worth; $22 billion bill under current law; $41 billion bill under Sanders' plan
Sanders' plan comes as more liberal Democrats have been raising the idea of a wealth tax or higher rates for the most wealthy Americans. 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 $10 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 $50 million and a 3% tax on asset above $1 billion.
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