During the Gilded Age, in the midst of out of control inequality, our country created the estate tax to combat the growing power of the economic elite. But as present-day inequality reaches levels we haven’t seen in nearly a hundred years, rather than ask the wealthy to pay more, Republicans in Congress passed a tax bill in 2017 that dramatically cut the estate tax.
Thanks to that bill, you can now pass along tens of millions of dollars without paying a cent in estate tax, while working Americans pay taxes on every dollar that they earn.
As a millionaire who will end up paying the estate tax, I say that we should expand it. Tax my estate. Trust fund babies who have done nothing to earn their wealth besides being born into the right family, have no right to pay a lower tax rate on their millions that hardworking Americans do on the income that they work for.
Luckily, there are some lawmakers willing to stand up for economic fairness who agree with me. This week, Rep. Jimmy Gomez (D-CA) and member of the Ways and Means Committee introduced the For the 99.8% Act, which would strengthen the estate tax by rolling back the Republican tax cuts.
Current law only taxes inherited wealth above $11.2 million for singles and $22.4 million for married couples at a flat rate of 40%. That means that if your estate is worth less than that, you pay nothing. Even if it’s worth more, you only pay that 40% on the amount above the cutoff. So someone could inherit $22,800,001 and only pay 40 cents total on that entire amount.
Under the For the 99.8% Act, the estate tax will return to the minimum level of $3.5 million for singles and $7 million for married couples and tax it at a progressively scaling rate as we had during the 1950s. This means the larger the estate, the higher the tax rate—the exact same way we tax income now.
Contrary to what some of my wealthy counterparts would have you believe unless you are fabulously wealthy, you have nothing to fear from the so-called “death tax.” The estate tax only applies to the wealthiest Americans. Currently, the tax affects 1,800 estates each year. That’s only 0.2 percent of all the estates in this country that would be subject to this tax, hence the bill’s name, the For the 99.8% Act. Under Rep. Gomez’s bill that number would return to the 2009 level of 5,600.
By the way, all of those myths you may have heard of small farms and businesses targeted by this supposed predatory tax are just that—myths. The average net worth of small farms and businesses was about $830,000, which isn’t high enough to qualify for the estate tax. In fact, in 2017, only 20 family farms or businesses were estimated to have owed any estate tax at all, and even then, the Gomez bill will add protections for family farms allowing them to lower their assessed value by up to $3 million. This means this tax is for only the richest of the rich.
Continuing to give wealthy heirs a tax break while middle income and low-income people struggle to get by, would be a recipe for disaster. Today’s wealth inequality has become so obscene that the wealthiest 1% own upwards of 40% of the nation’s wealth. This is unsustainable.
Working Americans need better access to healthcare, a lower cost of living, better infrastructure, and a higher wage. No tax cut is worth leaving millions of Americans to struggle for the basic essentials, much less one that caters exclusively to the heirs of multi-million dollar fortunes.
Charlie Simmons is a retired tech executive from Silicon Valley and a member of the Patriotic Millionaires.