Raise
the Estate Tax on the very rich
At
a time of historic economic inequality, it should be a no-brainer to raise a
tax on inherited wealth for the very rich. Yet there’s a move among some
members of Congress to abolish it altogether.
If
you’re as horrified at the prospect of abolishing the estate tax as I am, I
hope you’ll watch and share the accompanying video.
Today
the estate tax reaches only the richest two-tenths of one percent, and applies
only to dollars in excess of $10.86 million for married couples or $5.43
million for individuals.
That
means if a couple leaves to their heirs $10,860,001, they now pay the estate
tax on $1. The current estate tax rate is 40%, so that would be 40 cents.
Yet
according to these members of Congress, that’s still too much.
Abolishing the estate tax would give each of the wealthiest two-tenths of 1 percent of American households an average tax cut of $3 million, and the 318 largest estates would get an average tax cut of $20 million.
It
would also reduce tax revenues by $269 billion over ten years. The result would
be either larger federal deficits or higher taxes on the rest of us to fill the
gap.
This
is nuts. The richest 1 percent of Americans now have 42 percent of the nation’s
entire wealth, while the bottom 90 percent has just 23 percent.
That’s the
greatest concentration of wealth at the top than at any time since the Gilded
Age of the 1890s.
Instead
of eliminating the tax on inherited wealth, we should increase it – back to the
level it was in the late 1990s. The economy did wonderfully well in the late
1990s, by the way.
Adjusted
for inflation, the estate tax restored to its level in 1998 would begin to
touch estates valued at $1,748,000 per couple.
That
would yield approximately $448 billion over the next ten years – way more than
enough to finance ten years of universal preschool and two free years of
community college for all eligible students.
Our
democracy’s Founding Fathers did not want a privileged aristocracy. Yet that’s
the direction we’re going in. The tax on inherited wealth is one of the major
bulwarks against it. That tax should be increased and strengthened.
It’s
time to rein in America’s surging inequality. It’s time to raise the estate
tax.
ROBERT B. REICH, Chancellor’s Professor of Public Policy at
the University of California at Berkeley and Senior Fellow at the Blum Center
for Developing Economies, was Secretary of Labor in the Clinton administration.
Time Magazine named him one of the ten most effective cabinet secretaries of the
twentieth century. He has written thirteen books, including the best sellers
“Aftershock" and “The Work of Nations." His latest, "Beyond
Outrage," is now out in paperback. He is also a founding editor of the
American Prospect magazine and chairman of Common Cause. His new film,
"Inequality for All," is now available on Netflix, iTunes, DVD, and
On Demand.