Senator Wyden’s proposed ‘Billionaires Income Tax’ could raise significant revenue to fund President Biden’s Build Back Better investment plans.
The Republicans can’t control their baser greed impulse, as revealed in their latest move to abolish the federal estate tax, our nation’s only levy on the inherited wealth of the super-rich.
But what we really need is a bold intervention to break up growing dynasties of wealth and power.
Congress should jump on board an improved estate tax introduced today by Senator Bernie Sanders, that would levy a top rate of 77 percent on inheritances over $1 billion. Sanders bill, The For 99.8% Act, would also plug up loopholes and ban trusts that wealthy families use to hide and perpetuate wealth dynasties.
The estate tax, established by Congress a century ago to put a brake on the build-up of concentrated wealth and power, is paid only by a miniscule sliver of billionaires and multi-millionaires. At the time, Theodore Roosevelt supported the estate tax as a protection against the “tyranny of plutocracy.”
Sanders estate tax proposal is a plutocracy prevention act, squarely aimed at preventing the children of today’s billionaires from dominating our future democracy, economy, culture and philanthropy.
In December 2017, Republicans failed to abolish the estate tax as part of their $1.5 trillion dollar tax windfall for the superrich and a handful of transnational corporations. But they did raise the exemptions of who will pay the tax.
In 2019, fewer than 2,000 households will pay the tax, starting with couples with over $22.8 million (individuals with over $11.4 million).
Earlier this week, Senate leader Mitch McConnell and Sens. Charles Grassley (R-Iowa) and John Thune (R-SD) introduced the “Death Tax Repeal Act of 2019.” It is worth noting that the number of annual taxable estates in their home states of Kentucky, Iowa, and South Dakota are fewer than two dozen.
But the Republican’s pro-plutocrat proposal illustrates the problem facing our society. A handful of dynastically wealth families are using their clout to eliminate one of the few barriers to unfettered wealth extraction and accumulation.
The 400 wealthiest billionaires on the Forbes 400 list today own as much wealth as the bottom 64 percent of the US population combined, according to our IPS study, Billionaire Bonanza 2018. And they are clearly using this wealth and power to rig the rules further in their favor.
Under current estate tax law, someone with $15 million and $15 billion pay the same flat rate of 40 percent. The Sanders proposal would establish a much needed graduated rate system, with the rate rising with the size of the fortune. For example, estates between $10 million and $50 million would pay a 50 percent rate. Estates in excess of $1 billion would pay a 77 percent rate on all wealth over that threshold.
The Sanders proposal restores the top rate that existed between 1941 and 1976, when the estate tax was a more robust.
Since estate tax rates were lowered in the late 1970s and 1980s—and more loopholes opened—new wealth dynasties have emerged. The three wealthiest families in the US—the Waltons of Walmart, the Koch brothers, and the Mars family clan—together hold over $348 billion. Since 1983, their wealth has expanded an incredible 6,000 percent, adjusted for inflation.
The Sanders legislation would put a substantial brake on the wealth and power of the country’s 588 billionaires who control over $3 trillion in wealth. While his 99.8% Act would raise substantial revenue—potentially $2.2 trillion from this billionaire group alone—it would have the positive benefit of protecting our self-governing republic from the distorting influence of concentrated wealth.
Sanders’ bill would also address the growing problem of hidden wealth and aggressive tax avoidance. It would patch some holes in the current estate and gift tax system that have enabled families like Sheldon Adelson to use trusts to dodge billions in estate taxes.
When families accumulate hundreds of millions of dollars, they have enough wealth to meet any possible need and desire. They also have enough to provide future generations with privileged lives. Wealth exceeding $100 million is a form of power, the power to rig the rules of our economy and shape the culture through ownership of media. A steeply progressive estate tax is one of the ways we protect our society from Roosevelt’s “tyranny of plutocracy.”
Originally published by Common Dreams.