If a new estate tax bill introduced last Thursday by Sen. Bernie Sanders (I-VT) were to become law, Sanders says the Walton family, the owners of Walmart, would pay up to $85.8 billion more in taxes on their $221.5 billion fortune.
The family of Amazon Founder Jeff Bezos would pay up to $44.4 billion more in taxes on his $178 billion fortune.
The family of Tesla’s Elon Musk would pay up to $40.4 billion more in taxes on his $162 billion fortune.
Facebook CEO Mark Zuckerberg’s family would pay up to $25.3 billion more in taxes on his $101.7 billion fortune.
We’ve long known Bernie thinks billionaires shouldn’t exist, and his latest bill, the “For the 99.5% Act,” again takes direct aim at the wealth of the “0.5%ers.”
“Unbelievably, the United States today has more income and wealth inequality than almost any major country on Earth,” said Sen. Sanders. “This inequality has only deepened with the economic crisis brought on by COVID and by a tax system that allows for billionaires to pay less in taxes than working people across the country.”
According to a summary of the new Sanders bill, in America today, the top one-tenth of one percent owns almost as much wealth as the bottom 90% percent. The 50 wealthiest people in this country own more wealth than the bottom half of Americans — 165 million people.
“From a moral, economic, and political perspective our nation will not thrive when so few have so much and so many have so little,” Sanders said. “We need a tax system which demands the billionaire class to pay its fair share of taxes and which reduces the obscene level of wealth inequality in America.”
Last Thursday Sanders introduced not just one but two pieces of legislation he says will “end our rigged tax code and ensure the wealthiest people and largest corporations pay their fair share”—the “For the 99.5% Act” and the “Corporate Tax Dodging Prevention Act.”
Sens. Kirsten Gillibrand (D-NY), Sheldon Whitehouse (D-RI), Chris Van Hollen (D-MD), and Jack Reed (D-RI) are joining Sen. Sanders as original cosponsors of the For the 99.5% Act in the Senate, which the Sanders camp says has garnered the support of over 50 national organizations.
“America’s estate and gift tax system is the most loophole-ridden part of our tax law,” said Frank Clemente, Executive Director of Americans for Tax Fairness. “With the help of an army of highly paid advisors, America’s ultra-wealthy pay tax on only a fraction of their wealth or avoid tax entirely. The billions in taxes they dodge each year costs the rest of us better schools, affordable health care, and other critical services. The For the 99.5% Act closes the gaping loopholes in current law and will check the horrific concentration of wealth in the hands of billionaires.”
In the House, the companion estate tax legislation will be introduced by Rep. Jimmy Gomez (D-CA), while Rep. Jan Schakowsky (D-IL) will introduce the bill on offshore corporate tax dodging.
The “For the 99.5% Act” is a progressive estate tax on the fortunes of the top 0.5% of Americans, while the Corporate Tax Dodging Prevention Act intends to eliminate tax breaks and loopholes that encourage corporations to shift jobs and profits offshore.
Estate tax hike also in Biden’s sights?
The introduction of the bills came a week after the reintroduction of the “Tax Excessive CEO Pay Act,” and ahead of President Biden’s event set for Wednesday in Pittsburgh where the President plans to formally unveil the next phase of his economic agenda: a sprawling collection of infrastructure proposals that look to be paid for in large part by tax increases on the wealthy.
The “For the 99.5% Act” would establish a new progressive estate tax rate structure on the top 0.5% of Americans who inherit over $3.5 million in wealth. This bill also includes ending tax breaks for dynasty trusts; closing other loopholes in the estate and gift tax; and providing protections for family farmers by allowing them to lower the value of their farmland by up to $3 million for estate tax purposes.
For 2021, the personal federal estate tax exemption amount is $11.7 million, meaning any amount more that is subject to the federal estate tax unless otherwise excluded. A married couple has a combined exemption for 2021 of $23.4 million. The estate tax rate on the amount that exceeds $11.7 million for 2021 is a progressive tax between 18% and 39% for the first $1 million and a flat 40% for amounts over that.
In a statement announcing the “For the 99.5% Act,” Sanders says 99.5% of Americans would not owe a penny more in taxes under this bill, but the families of all 657 billionaires in America—who have a combined net worth of over $4.2 trillion—would owe up to $2.7 trillion in estate tax.
Specifically, this legislation would impose a 45% tax rate on estates worth $3.5 million and a 65% tax rate on the value of an estate worth over $1 billion.
The Sanders camp added that from 1941-1976, the top estate tax rate was 77% on estates worth more than $50 million. According to the Joint Committee on Taxation, this new bill would raise $430 billion through 2031.
Republican bill seeks to end estate tax
Meanwhile, on the other side of the aisle, Sens. John Thune (R-SD) and John Kennedy (R-LA) introduced legislation back in early March to permanently repeal the estate tax. Thune’s bill, the “Death Tax Repeal Act of 2021,” would, in his words, “finally end this purely punitive tax that has the potential to hit family run farms, ranches, and businesses as the result of the owner’s death.”
Thune also led the Senate’s effort to repeal the estate tax while Congress considered the Tax Cuts and Jobs Act (TCJA) in 2017. Although the final version of the TCJA did not repeal the estate tax, the law doubled the individual estate and gift tax exclusion to $10 million ($11.7 million in 2021 dollars) through 2025.
The Death Tax Repeal Act of 2021 faces extremely long odds against it with Democratic control of Capitol Hill and the White House.
SEE ALSO:
• Billionaires Beware: Sanders, Warren Wealth Taxes Aim to Thin Your Ranks
• Biden Ponders Major Tax Hikes for Corporations, Wealthy
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
