A snapshot of luxury condominiums and their ownership and occupancy trends offers a preliminary peek at the challenges posed by Seattle’s luxury boom.
Clinton proposes an expansion of the federal estate tax, our nation’s only levy on the transfer of accumulated wealth of multimillionaires and billionaires. The tax falls on fewer than two out of 1,000 estates, yet puts a brake on concentrated wealth, encourages charitable giving, and raises substantial revenue from those most able to pay.
Her plan would generate $260 billion over ten years, exclusively from multimillionaires and billionaires, that she plans to use for investments in expanding opportunity, such as reducing college debt, simplifying small business taxes and expanding the child tax credit.
The estate tax, which celebrates its 100th anniversary this month, was viewed at its inception as a way to address the excesses of the first Gilded Age. The impetus to pass a tax on inherited wealth came from rural populists and enlightened industrialists. In his 1889 essay, Wealth, steel magnate Andrew Carnegie observed about that estate tax “of all forms of taxation, this seems the wisest.”
President Theodore Roosevelt advocated for “a graduated inheritance tax on big fortunes” that should be “properly safeguarded against evasion” and must increase “rapidly in amount with the size of the estate.” Estate taxes, Roosevelt argued, were required “to preserve a measurable equality of opportunity.”
Clinton’s proposal adopts the Roosevelt principle by including a progressive rate structure—the greater the wealth, the higher the rate. Estates starting at $7 million would pay the current rate of 40 percent, but larger estates would pay incrementally more. Estates over $1 billion would pay a 65 percent rate. The plan also mirrors Bernie Sanders’s Responsible Estate Tax Act and represents a concrete example of her adopting a piece of his anti-inequality agenda. Such a tax would truly put a brake on the concentration of wealth.
The Clinton proposal makes another important improvement: It would close a “billionaire’s loophole” known as the Grantor Retained Annuity Trust (GRAT), which allows estates of the super-wealthy to avoid the estate tax. Some billionaires using the GRAT “billionaire loophole” include Goldman Sachs CEO Lloyd Blankfein, Facebook’s Mark Zuckerberg, Dish Networks’ Charles Ergen, fashion designer Ralph Lauren, and multiple Walton family members.
To be clear, the impact of this expansion is not on the successful small businesses hoping to hand off their enterprise to their children as some wrongly argue. The real impact falls on people like the Waltons, America’s wealthiest family, whose children will inherit tens of billions of dollars combined.
Clinton’s plan also ends the “stepped-up basis” loophole that allows heirs to avoid paying any capital gains on the assets they inherit, which have never been taxed.
Candidate Donald Trump said he would repeal the estate tax. He joins a generation of “born on third base” presidential candidates opposed to the tax. Like George W. Bush and Mitt Romney, Trump is from a family that experienced large transfers of inherited wealth subject to estate taxation. His children would avoid an estimated $4 billion in tax liabilities if he’s successful in his bid to eliminate the estate tax.
Reducing inequality appears to be an insurmountable matter. But there are key interventions that would dramatically reduce the vicious cycle of concentrated wealth, political corruption, and a collapsing standard of living for the majority.
Clinton’s proposal is a handhold on this path, one of the policies our country could and should implement to eliminate the grip of the super wealthy on our society.
Chuck Collins is a senior scholar at the Institute for Policy Studies where he co-edits Inequality.org, and author of the new book, Born on Third Base: A One Percenter Makes the Case for Tackling Inequality, Bringing Wealth Home, and Committing to the Common Good.