Well, Sens. Bernie Sanders (I-VT), Tom Harkin (D-IA) and Sheldon Whitehouse (D-RI) have finally rectified the situation, proposing a progressive estate tax:
According to a letter they were circulating, the measure would impose a 10 percent “billionaire’s surtax” on the value of inheritances worth more than $500 million per spouse, or $1 billion per couple. That would be on top of a 55 percent rate on the value of estates above $50 million. Below $50 million but above $10 million, and the rate would be 50 percent; and between $3.5 million and $10 million, estate values would be taxed at 45 percent, same as in 2009 law that has since lapsed. Estate values below $3.5 million would go untaxed, also as in the 2009 law.
“We have an entire party that is dedicated to preventing working people, who have lost their jobs through no fault of their own as a result of this economic meltdown, from getting unemployment insurance,” said Whitehouse yesterday. “But they are completely satisfied with an oil tycoon worth $9 billion having his estate go completely tax-free to his heirs.” “At a time when we have a record-breaking $13 trillion national debt and a growing gap between the very rich and everyone else, people who inherit multi-million and billion dollar estates must not be allowed to avoid paying their fair share in estate taxes,” added Sanders.
Deficit hysteria has gripped Capitol Hill and is preventing any meaningful effort to boost job creation or bolster the social safety, while income inequality continues getting worse, so it makes sense to add some progressivity to the estate tax while still retaining the 2009 exemption. While the new proposal will definitely bump up the effective rate for those paying the tax at the highest end of the income scale (which is currently 14 percent), it’s a good way to raise revenue with exceedingly minimal impact on the wider economy.