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It need not be this way. We can just restore the estate tax of 2009, which exempts $3.5 million estates of individuals, $7 million of couples, applying a top marginal rate of 45% on the largest estates. Or we can raise even more revenue sensibly. In the House, Rep. Jim McDermott (D-WA), former ADA National President, has introduced a progressive bill that would exempt the first $2/$4 million of a person/couple’s estate. The rate on the amount over the exemption would be 45%, up to $5/$10 million. From $5/$10 million the tax would be 50%, and in excess of $10/$20 it would be $55%.
Senators Bernie Sanders (I-VT), Sheldon Whitehouse (D-RI), Sherrod Brown (D-OH), and Tom Harkin (D-IA) have introduced a similar bill in the Senate, which exempts estates of less than $3.5/$7 million. Estates of over $3.5/$7 million would be taxed at 45%, up to $10/$20 million. Over $10/$20 million the rate would be 50%, up to $50/$100 million, and over $50/$100 million the rate would be 55%, with a 10% surtax on estates of billionaires.
A fringe benefit of the estate tax is that it encourages wealthy individuals to leave large amounts of money in their wills to charity in order to lower their tax bill. Allowing the estate tax to expire will be devastating to educational institutions, the arts, and other worthy charities, so there are many good reasons not to allow it to happen.
Please urge your Representative to co-sponsor Congressman McDermott’s bill. And urge your two US Senators to co-sponsor the Sanders-Whitehouse-Brown-Harkin bill. BackComments
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The lucky heirs of New York Yankee owner George Steinbrenner, who died this month, will receive about $1.15 billion (according to Forbes) tax free without lifting a finger. (It might even inspire them not to work for the rest of their lives. Large inheritances can do that.) In fact, Steinbrenner is the fourth billionaire to die so far this year. Because the Senate allowed the estate tax to expire, our government won’t receive a nickel from those estates. Had last year’s rate been extended, the Treasury would have received $500 million just from the Steinbrenner estate to help pay down the deficit. With the multimillion dollar exemptions we allow, the estate tax has affected only about one percent of estates – only those of America’s wealthiest individuals. But expiration of the tax will cost the US Treasury about $14.8 billion this year, $1 trillion over the next ten years. For the first time since 1916, we are exempting the estates of millionaires and billionaires, dumping the cost of government services on the shoulders of all of us non-millionaires.