Bernie Sanders to propose dramatic expansion in estate tax on richest Americans

[brooklynite]

Source: Washington Post

Sen. Bernie Sanders (I-Vt.) will unveil a plan Thursday to dramatically expand the federal estate tax on the wealthy, including a new 77 percent rate on billionaires' estates, as leading Democratic politicians push new taxes on the richest Americans to combat inequality.

Sanders’s bill, the “For the 99.8% Act,” would tax the estates of the 0.2 percent of Americans who inherit more than $3.5 million, while the rest of the country “would not see their taxes go up by one penny under this plan,” according to aides to the Vermont senator, who is considering a 2020 presidential bid.

Three top Republican senators this week released a plan to outright abolish the estate tax, which the GOP already significantly weakened with their 2017 tax law to only apply to those passing on more than $11 million (or $22 million for couples). Sanders’s plan would restore the 77 percent top estate tax rate that was in place in the U.S. from 1941 to 1976, tax estates worth more than $3.5 million, and create several new estate tax brackets, including a 55 percent rate on estates worth more than $50 million.

“It is literally beyond belief that the Republican leadership wants to provide hundreds of billions of dollars in tax breaks to the top 0.2 percent of our population. . . . This is not only insane, it tells us the degree to which the billionaire class controls the Republican Party,” said Sanders, who introduced the plan with the support of Thomas Piketty, a well-known French economist on wealth consolidation. “Our bill does what the American people want us to be doing and that is to demand that the very wealthiest families in this country start paying their fair share of taxes.”

Read more: https://www.washingtonpost.com/us-policy/2019/01/31/bernie-sanders-propose-dramatic-expansion-estate-tax-richest-americans-including-percent-rate-billionaires/

[zentrum]

1. Great for Bernie.

I know he can't pull this off on his own, and am aware of all of Bernie's myopia's and problems , but now his 2016 statements on behalf of the expansion of SS and Medicare have become platforms of the whole Party.

He opens the space and the dialogue and moves the Party in a more progressive direction. Despite being Bernie. Good work!

[TexasTowelie]

2. I guess this is Bernie's response to Elizabeth Warren's tax proposal.

It's more palatable than Warren's plan since the taxes are paid only once (after a death) instead of an annual basis. It may also be more enforceable than Warren's plan because it works within the current tax code while Warren's plan will require appraisers to audit the wealthy.

It will be interesting to see how much revenue each plan raises for the Treasury and the arguments for and against both plans (along with the other plans that will be unveiled).

[shanny]

27. I don't think of it as a response,

I think of it of piling on. With AOC's 70% top marginal bracket, and Warren's wealth tax, and the proposal to (eventually) erase the cap on SS, this seems like another piece of the puzzle.

I bet the zillionaires are crapping in their pants. I certainly hope so.

[amcgrath]

3. US tax code needs to encourage behaviours

Simply setting flat rates just encourages total avoidance and has little benefit in the interim.

Ideally taxes would encourage the rich to behave a bit more beneficially. I don't have the time or knowledge to set definitive amounts, but a rough concept would be that a tax of 30% might be applied to 'estate' that is invested in American businesses that comply with all labour codes.

A tax of 70% on foreign investments. A tax of 85% that is simply sitting in banks and a tax of 99% on cash sitting in off-shore banks. The tax breaks for investments in US based companies can easily be justified as the companies will be generating revenue and paying taxes as they go.

There is far too much money sitting in off shore accounts that the ultra-wealthy will never be able to spend, it is taken from workers and shareholders for no other reason than to boost the egos of those that possess it

[mahatmakanejeeves]

6. "A tax of 85% that is simply sitting in banks"

That will encourage saving for a rainy day.

I don't know if you know how banks work, but....

Oh, never mind.

[Calista241]

23. Many of the billionaires today created their own businesses, and people like Elon Musk

came to America to start their business because the environment to generate capital and wealth are appealing. People like Musk will start their Tesla's and SpaceX's elsewhere if we start confiscating assets and money.

My opinion is that there is a happy medium in the middle, rather than letting them go untaxed or confiscating everything.

[shanny]

28. I must have missed where anybody suggested "confiscating everything."

[Farmer-Rick]

51. I'm all for confiscating everything.

It's only theirs because we let them keep it. They should NEVER forget that.

[shanny]

52. y'know, that is a very good point.

and I agree with those who think that a society that allows billionaires to exist is an immoral one.

[EX500rider]

55. "It's only theirs because we let them keep it."

Is that true about your stuff also? Or just people with more then you?

[Farmer-Rick]

60. It's a tongue in cheek comment but if you want to explore that idea

I really have nothing in comparison to what Gates or Trump have.

If I were in a country of only 60 people and only I had enough wealth to have a roof over my head, enough to eat and drink, enough to stay warm and cool, enough for healthcare and a little entertainment, then yes, those 60 people would have a right to confiscate what I have. About 1.7% of the people in the US have the wealth of Trump, McConnell, Gates and other super wealthy people have. That equates to about 1 in 60. That's about 2 classrooms full of people. Would I even want to be the only comfortable person while I know everyone else is suffering? I hope not.

I think allowing people to accumulate TOO Much Wealth, more than a small country, is dangerous to democracy. They instigate and promote hate programs (Nazis, KKK, antisemitism) and push laws to support their never ending desire for more. This literally disrupts a peaceful society. The Koch brothers and the excessively wealthy fund every crazy idea that comes along from Ayn Rand, to Milton Friedman, to Pinochet, to Kavanaugh, to the Birch society, to federalist. Some of these ideas would have died a natural death if not for the rich supporting them. Nazis were bankrolled by scared little rich men who were afraid of socialist. Many of the uber rich got their wealth thru illegal means and processes. Many of them inherited their wealth. Neither of these 2 things improves our country. And yet they continue with no repercussions and very little paid into taxes.

So, yeah, if I was 1 of only 1.7% of the richest people in the country, I would hope a better distribution system for wealth (and yes my wealth too) would be developed so we could all be comfortable and Not suffering. I once heard a very rich guy in Denmark say "I pay a large part in taxes, and don't advocate for paying less, because I want to live in a rich country. I don't want to be the only one who is comfortable." Same here.

[EX500rider]

61. Matter of perspective..

...lots of people living in shacks in the 3rd World who probably think you have to much wealth and their deserve part or all of it, your opinion may vary.

[Farmer-Rick]

63. Well, I have facts to back me up. It's not just an opinion

It is a fact that the uber rich disrupt a peaceful society. Look at what the rich have done to our democracy. Look at what they did in the 1920s. They started WWII and I. Rule by organized money is just as bad as rule by organized mob. Look at the extensive poverty in Russia.

It is NOT a fact that the middle class in most countries....even the developed countries, create disruptive environments continually grasping for more by taking away economic opportunity from others and inciting people to hate and violence. The middle class is usually the target of the propaganda by the rich. The rich are constantly looking to the middle class to do their dirty work for them.

People living in shacks is horrible and my measly 2 cents ain't going to last them long but Putin's and Gate's money will last them a very long time. That is a fact. I would recommend that if they want to gain some of their stolen wealth back, they should look to the people who took it from them. The rich, mobsters and political leaders. They should look to the rich who made it so they had to live in shacks. Because After my 2 cents runs out they will be back to living shacks.

[TomCADem]

4. So, a wealth tax like Warren proposed?

Maybe this will be like steel tariffs that he strongly supported, but opposed when Trump imposes them. It is interesting now to see Sanders try to distance himself from all of the proposals that he had in common with Trump, and reinvent himself from an anti-trade, anti-globalist populist.

[Voltaire2]

36. Wealth tax is similar but significantly different.

I like Warren’s proposal but it is an annual tax on current wealth (and may have constitutional issues.) An estate tax is a one time tax on the generational transfer of wealth, and is settled law.

[Cold War Spook]

5. I am more against it than for it.

One problem I see, a man starts a business and it is very profitable. He puts the profits back into the business and then dies. His son inherits the business but all the money has been put back into the business and now he has to sell it, fire some workers or get a large enough loan to cover the estate tax. It isn't hard for a business to be worth $3.5 million but not have any cash flow. I don't like any estate tax on inheritance that stay within the immediate family. Of course the only inheritance I will be leaving is an old manufactured house and an old car.

[csziggy]

9. There are plenty of ways to cover high taxation available

For instance, my father was concerned about how his estate would be taxed. In 1993 when he was doing his planning, estate tax was 50% at the level his estate would have been. He bought an insurance policy that would cover 50% of his net worth. Since estate taxes have been reduced so much and the exempt level raised so much, that ended up be "free" money to his heirs.

As for the situation you outline, the man could have given stock in the business to his son. If he retained 51% he would still have control until he died, but his son would own 49% outright, reducing the taxes on the business. In fact the father could also give shares to his wife so that the tax consequences would be spread out. Or he could buy life insurance that would cover the probable estate taxes.

Say your hypothetical business is worth $10 million. The father could will 30% to his wife (a marital portion is traditionally 30% which is not taxed during the life of the spouse). If he had given his son 49% of the company in stock previously, the value of the business in the estate would be less than $3.5 million. The entire taxable estate could be worth less than that, also. The marital assets would be taxed upon the death of the wife but that could be planned for.

I am not an attorney, much less an estate attorney, or a tax professional. This is stuff I have learned due to my father's estate (he died in 2013), my mother's estate (she died in 2018), and my mother in law's estate (she died in 2017) as well as talking to my own estate attorney.

If a wealthy person wants the wealth to stay in the family they have to do the proper planning to make it happen. They may end up paying a lot in consultant fees, but they will pay less to the government. If they do not plan ahead and their heirs take a hit, well then, they did not care enough to make those plans.

[hueymahl]

16. Correct

There are MANY ways to shelter a family business.

[TexasBushwhacker]

10. But they can build exceptions for family businesses and farms

Smart businesspeople take out substantial life insurance policies for the express purpose of paying inheritance taxes. They can also make their children substantial partners in the business before it becomes too valuable so that when they die, the entire business isn't property of the estate.

I'm a bookkeeper and while I don't disagree that a business can be worth $3.5 million and have poor cash flow, it's still the owner's responsibility to think ahead and plan for inheritance taxes if they don't want it to be a burden for their heirs. Of course the entire business can still pass to a spouse without ANY inheritance taxes being assesed and that's as it should be.

When it comes to passing businesses/farms on to children and other heirs, they often get sold simply because all the heirs aren't interested in continuing to own the business/farm. Then the ones that want to keep it have to buy out the ones that don't. That goes for family homes too. That happens even without inheritance taxes. It doesn't have to be viewed as a great tragedy.

[Cold War Spook]

30. Good answers. I can't believe I wrote that. No more Family Feud.

The thing is I don't like the idea of someone building up a business and then have an inheritance tax when they die even if it stays in the family. So the old man dies and the son inherits it. Has insurance to cover the tax. Then His son inherits it and he has to have insurance. Then his daughter inherits it and she has to have insurance. What ever their income from the company, they pay income taxes on it. And the government collects the tax every time. I feel the same way about people having to pay income tax on a portion of their Social Security under certain conditions, but only if it is income from working, not investments. Nobody should have to pay taxes on Social Security, for one reason, for a certain number of years, they are just recouping what they paid in.

[Hassin Bin Sober]

48. For starters, your $3.5 million dollar business is one hundred percent exempt.

Ok ok , now I suppose your hypothetical is $5million?

He only pays tax on $1.5 @ 45%

Cry me a fucking river if he has to pay $675,000 in tax on $5 million. And if he can’t raise 675k then maybe the business should be liquidated.

If I won a $5 million dollar lottery tomorrow my tax bill would be way higher.

All these nonsense hypotheticals aside, why should trust fund babies get to go through life and never pay a dime of income taxes on money they receive.

And before you say it, the people who bought lottery tickets that funded my hypothetical winnings payed income tax on that money.

As did my real life customers who pay my salary/income. That’s how taxes work. For some reason I can’t cry about my income taxes because my earnings came from already taxed dollars. Funny that.

They get a big fat exemption that by itself could set up a moderately comfortable life. After that they should pay.

Not to mention the handful of trust fund babies I’ve known manage to live a pretty comfortable tax free existence while their parents are alive - with family homes and family compounds and corporate jets and corporate condos.

[Cold War Spook]

49. I am actually against any type of inheritance tax.

I don't care how much a person is worth, he or she has been paying taxes including Social Security on all employees. No tax on inheritance or Social Security. As for liquidating the business, what happens to the workers. Also who do you think pays all those insurance premiums? It is the employees and consumers.

[QC]

58. Stop being mean to the Job Creators!!!!! n/t

[TexasBushwhacker]

7. As a society, we shouldn't be in the business of supporting dynasties

These extreme estates, for lack of a better description, have generally been built by exploiting workers, the environment and/or existing tax laws. Inheritance taxes are a way of harvesting some of the money that's been siphoned out of the economy.

[Coventina]

8. Totally in favor. NO INHERITED WEALTH!!

One modest property, and a few million should be the MAX of what can be handed down.

[oldsoftie]

13. So above that amount, you favor a 100% tax.

[Coventina]

33. absolutely n/t

[oldsoftie]

35. Well, maybe 5-10% of the country would support confiscation.

Very Maduro-like!

[Coventina]

40. Oh please. The 1% are eating us. They need to be eliminated.

Globally.

For good.

The future of the planet is at stake.

[oldsoftie]

42. So now you've gone from confiscation to "elimination". Wow.

The "rich" arent the ones "killing" the planet; its everyone. If you actually believe the planet is being killed that is. Its not, of course, but it may be harder for HUMANS to live here. But even if we all vanished the planet would survive on its own

[Coventina]

46. Eliminated as in.... no more oligarchs.

I didn't mean they should be killed.



And yes, they are killing us and the planet.
Just one example: the Koch brothers who use their wealth so that they can keep poisoning the planet.

But you knew that, of course.

[George II]

45. Perhaps you should contact the Senator who is proposing this legislation....

....he has three homes himself.

[Coventina]

47. Agree. I think most career politicians are hypocrites.

But any step forward on demolishing inherited wealth I will support.

[NurseJackie]

11. Didn't Elizabeth Warren just do this? Is he copying her or reacting to her?

[Voltaire2]

37. Lulzd.

This is a funny talking point. Poorly researched. Probably an intern came up with it.

Anyway no. Not the same. Do you know why?

[oldsoftie]

12. As long as the tax is on cash & stocks, not running businesses & farms.

You shouldn't have to sell your business to pay an inheritance tax. Or borrow against it to its detriment.

[hueymahl]

17. Agree, but how do you draw the line?

Does the business have to have real property? What about employees? Positive cash flow?

This is a highly complex situation, trying to define what is a business or farm vs what is just a tax shelter. You start carving out exceptions, and you can end up creating massive industries just for tax planning to get you inside these exceptions.

[oldsoftie]

24. Well, cash & its equivalents would be easy to list.

I just think its best to leave operating businesses alone. Too easy for negative press. "We had to sell the farm to a big corporation to pay the taxes".
Its not going to raise that much money anyway. Its just anther good talking point to campaign with.
And trust me, regardless of how they write the law, I bet I can tell you how to get around it in a short period of time. Aside from a sudden death, anyone getting up in age can easily move/hide/transfer/rename assets. Its the same with income; anything earned that isnt on a 1099 or W2 is easy to NOT pay tax on. And in our economy, thats a TON of income.
If the candidates REALLY want to raise the kind of money that makes an impact on the debt, they need to consider a consumption tax like most EU countries have. Then daddy cant get away with buying jimmy that Maybach without paying a nice tax to Uncle Sam

[Sgent]

32. Mars is a family owned business

with ~35 billion in revenue and 80,000 employees (Mars, M&M's, Wrigley, Iams, Pedigree, VHA, Banfield Pet Hospital), etc.

Giving private companies more advantages over public companies is bad public policy IMHO.

[Cold War Spook]

50. I really want that car.

Do you think I can get it through GoFundMe? I am not joking, I really want that car.

[oldsoftie]

57. I've seen some crazy shit get funded thru GoFundMe, you never know!!

Just be sure to put a good looking woman in the pitch.

[TexasBushwhacker]

56. It's one piece of the bigger puzzle

We also need to get corporate taxes back up. In the 50s & 60s, corporations were contributing about 30% of total tax revenues. Now it's down to 10%. While corporate profits and worker priductivity have soared over the last 40 years, wages for the lower 80% have stagnated.

[oldsoftie]

62. The world was different back then. Today, a company can operate from anywhere.

We see how trump's tariffs have caused higher prices on the items involved.
Higher taxes will result in the same thing; higher prices for us, the consumer. Corporations are only going to operate with a certain profit margin. Raises taxes, they raise prices. I'd still rather see a consumption tax, then its our choice what to pay

[Tarc]

14. It's good to see Bernie resuming Senatorial duties again. I fully support this measure

and look forward to his arguments made on the floor.

[GemDigger]

15. Bernie feels like he isn't getting enough attention. That damn AOC and Warren gal

seems to be taking some of his attention away.

[DavidDvorkin]

18. And Harris

Maybe especially Harris.

Yes, that was my response to this, too.

[billpolonsky]

21. It looks like...

He is actually doing something as a duly elected Senator.

He seems to incite a lot of cynicism in Republicans and Democrats alike.

Quite a lot of what he talked about in 2015-16 ( his crazy ideas) are now talking points and milestones expected by a majority of Americans and now tenants and expectations for Democratic hopefuls on 2020.

[JudyM]

54. That's the wonderful truth. He led an impressive shift in our party line.

[diva77]

59. +1,000,000 This.

[shanny]

29. lol

[Cha]

31. Yes, Thankfully.. and Kamala.

[Voltaire2]

38. Lulzd.

[SWBTATTReg]

19. All I will say is that it seems like the middle class is struggling to make ends meet, and the

number of billionaires and multi-millionaires keeps going up. The numbers in middle class have been dropping and a few have slipped into below middle class and are struggling with even the basics. Something is wrong with this picture when obscene wealth is being made at our expense and we're still struggling. Nothing about awarding those who helped those who made the big time, or at least, I haven't heard of very many other rich Amazon stakeholders making it big too.

[Maxheader]

20. Go gettem burny...

Shove that estate tax for the 1%ers right under mitch the bitches nose...

I'm sure he and his senate wingers will sign off without any problems...

[shanny]

53. you say that like giving the base something to work toward is a bad thing

[Yo_Mama_Been_Loggin]

22. Another reason why Howard Schultz is running?

[earthshine]

25. Once again, Bernie proves that his voice will be valuable in the primaries.

I support Bernie. I also support others, especially Warren.

I want them all on stage debating these points in the primaries. That's how public awareness is created.

[Jarqui]

26. I think they may have to look at going further

An awful lot of it will probably wind up outside of the estate in offshore trusts in the Cook Islands or wherever to avoid the taxation.
These folks have the bucks to hire the accountants to do it.

[oldsoftie]

44. Exactly. Whatever law they pass, you can find a way around most of it in short order.

And maybe even end up LOSING revenue in the process. Its merely a "feel good" initiative.
Taxing consumption is the way to go if we are serious about raising the amounts of money we need to do the things we the people want to do.
But it will never happen, and the debt will continue to rise even year. You can certainly count on republicans to want to cut taxes and yet still spend.

[George II]

34. He used to rail against the "millionaires and billionaires and the top 1%"...

...now it's "billionaires and the top 0.2%". I wonder why that changed?

[Voltaire2]

39. 3.5 million is less than a billion.

[oldsoftie]

43. Because everyone in Congress is a multi millionaire, not a billionaire.