WASHINGTON, Jan. 31 – In an effort to combat rising wealth inequality, Sen. Bernie Sanders (I-Vt.) introduced legislation Thursday to establish a progressive estate tax on the fortunes of the top 0.2 percent of Americans and significantly increase rates on billionaires.
Sanders' legislation, the For the 99.8% Act, would raise $2.2 trillion from the nation's 588 billionaires. In contrast, Senate Republican leadership proposed a bill this week that would repeal the estate tax for the richest 1,700 families in America.
"At a time of massive wealth and income inequality, when the three richest Americans own more wealth than 160 million Americans, 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," Sanders said. "Our bill does what the American people want by substantially increasing the estate tax on the wealthiest families in this country and dramatically reducing wealth inequality. 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' bill would only apply to the wealthiest 0.2 percent of Americans. It would establish a 45 percent tax on the value of an estate between $3.5 million and $10 million; a 50 percent tax on the value of an estate between $10 million and $50 million; a 55 percent tax on the value of an estate in excess of $50 million; and a 77 percent tax on the value of an estate above $1 billion – a return to the top rate from 1941 through 1976.
The legislation would also close tax loopholes that have allowed billionaire families to pass fortunes from one generation to the next without paying their fair share of taxes.
While the Walton family, the wealthiest family in America, would get up to a $63 billion tax break from the Republican proposal, they would owe an estate tax of up to $130 billion under Sanders' reform.
The Kochs, a family worth over $97 billion, would owe an estate tax of up to $74 billion.
And the family of Jeff Bezos, the founder of Amazon, who has a net worth of more than $130 billion, would pay an estate tax of up to $100 billion.
The For the 99.8% Act was endorsed by a number of leading economists including Thomas Piketty, Emmanuel Saez, Gabriel Zucman, Robert Reich and Darrick Hamilton.
"The estate tax was a key pillar of the progressive tax revolution that the United States ushered one century ago. It prevented self-made wealth from turning into inherited wealth and helped make America more equal. However, the estate tax is dying of neglect, as tax avoidance schemes are multiplying and left unchallenged. As wealth concentration is surging in the United States, it is high time to revive the estate tax, plug the loopholes, and make it more progressive. Sen. Sanders' bill is a bold and welcome leap forward in this direction," said Emmanuel Saez, professor of economics at the University of California, Berkeley.
“One century ago, the US invented steeply progressive estate and income taxes in order to maintain the egalitarian and democratic legacy of the country. Today's US is becoming even more unequal than Pre-World War I Europe. The way out is stronger investment in skills, higher paying jobs and a more progressive tax system. Sen. Sanders' estate tax bill, including a 77 percent tax rate on estate values above $1 billion, is an important step in this direction,” said Thomas Piketty, Paris School of Economics professor.
For a summary of the legislation and statements from other leading economists, click here.
For the bill text, click here.