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estate tax
Sanders Counters GOP Giveaways With Tax Hike on Estates of Ultra-Wealthy
"Over and over again, Republicans in Washington have professed their deep concern about the national debt and yet virtually all of them have signed onto legislation that would provide a $1.8 trillion tax giveaway to billionaires."
Apr 18, 2023
Sen. Bernie Sanders on Tuesday unveiled legislation that would hike taxes on estates worth more than $3.5 million as congressional Republicans work to repeal the estate levy entirely—a move that would hand nearly $2 trillion to the wealthiest people in the United States.
The For the 99.5 Percent Act, which Sanders (I-Vt.) unveiled alongside Sen. Elizabeth Warren (D-Mass.) and Rep. Jimmy Gomez (D-Calif.), would impose a 45% tax on estates worth between $3.5 million and $10 million, a 50% tax on estates worth between $10 million and $50 million, a 55% tax on estates worth between $50 million and $1 billion, and a 65% tax on estates valued at over $1 billion.
"This is not a radical idea," Sanders' office said in a press release. "In fact, from 1941-1976, the top estate tax rate was 77% on estates worth more than $50 million."
The new legislation would not impose any new taxes on 99.5% of Americans.
"Over and over again, Republicans in Washington have professed their deep concern about the national debt and yet virtually all of them have signed onto legislation that would provide a $1.8 trillion tax giveaway to billionaires by repealing the estate tax," Sanders said in a statement Tuesday, referring to the GOP's Death Tax Repeal Act of 2023, a bill led by Sen. John Thune (R-S.D.).
Thune's legislation currently has 40 Republican cosponsors, including Senate Minority Leader Mitch McConnell (R-Ky.), whose wife received an inheritance worth between $5 million and $25 million following her mother's death in 2007.
Dozens of House Republicans have also backed legislation that would repeal all federal income taxes and replace them with a regressive national sales tax.
"At a time of massive wealth and income inequality, we need to make sure that people who inherit over $3.5 million pay their fair share of taxes," said Sanders. "We do not need to provide a huge handout to multi-millionaires and billionaires. It is unacceptable that working families across the country today are struggling to file their taxes on time and put food on the table, while the wealthiest among us profit off of enormous tax loopholes and giant tax breaks."
According to a summary released by Sanders' office, the new legislation would also target loopholes and inadequate rules that have allowed billionaire families like the Waltons to pass down wealth tax-free.
The bill was introduced with the backing of more than 420 national, state, and local groups, including the AFL-CIO and Public Citizen.
"For years, billionaires and multi-millionaires have gotten away with paying little to nothing in taxes," Warren said Tuesday. "This legislation will help us fix our broken tax system by closing loopholes that the ultra-wealthy use to dodge paying their fair share. Congress should pass this bill so we can invest in working families and build a brighter future for all of our children."
\u201cWe can make our tax system fairer AND raise revenues to ensure we can build a brighter future for all of our kids. It's a win-win-win.\u201d— Elizabeth Warren (@Elizabeth Warren) 1681825163
Citing an estimate from the Joint Committee on Taxation, Sanders' office noted that a previous version of the For the 99.5 Percent Act would have raised $430 billion in federal revenue over its first decade.
The new bill, which faces long odds in both chambers of Congress, was unveiled on Tax Day, an occasion that—as one group put it in a statement earlier Tuesday—serves as "an annual reminder that the ultra-rich exist in an entirely separate world when it comes to taxes."
The For the 99.5 Percent Act is one of several pieces of legislation mentioned by the Patriotic Millionaires in its newly released tax reform agenda, which calls for wealth taxes, a 90% top tax rate on centimillionaires, and other changes to "fundamentally reimagine our tax code."
"For our future, our grandchildren's future, and our country's future," the group said Tuesday, "we must tax the rich."
Survey data released Tuesday by the progressive advocacy group Groundwork Action found that nearly 75% of U.S. voters, regardless of party affiliation, want Congress to prioritize cracking down on wealthy tax cheats and closing loopholes that benefit the rich.
The polling data also showed that 70% of U.S. voters want Congress to "make sure millionaires and billionaires pay more in taxes."
"Voters across the political spectrum are tired of hearing about billionaires and massive corporations paying less in taxes than nurses, teachers, or firefighters, so it's no surprise they're rejecting the Republican agenda of protecting tax breaks for the wealthy at all costs," said Lindsay Owens, executive director of Groundwork Collabortive Action.
"If Republicans want to talk about deficit reduction," Owens added, "Democrats have an easy response: Let's make the wealthiest Americans and biggest corporations pay their fair share before asking workers and families to pay a penny more."
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Senate Dems Urge Treasury Chief to Crack Down on Rich Tax Dodgers
"The Treasury Department can and should exercise the full extent of its regulatory authority to limit this blatant abuse of our tax system by the ultrawealthy."
Mar 21, 2023
Four U.S senators this week called on Treasury Secretary Janet Yellen to use her existing authority to go after American billionaires and multimillionaires who "use trusts to shift wealth to their heirs tax-free, dodging federal estate and gift taxes."
"They are doing this in the open: Their wealth managers are bragging about how their tax dodging tricks will be more effective in the current economy," stressed Sens. Elizabeth Warren (D-Mass.), Chris Van Hollen (D-Md.), Bernie Sanders (I-Vt.), and Sheldon Whitehouse (D-R.I.).
"While we look forward to continuing to partner with you on legislative solutions," the senators wrote to Yellen, "the Treasury Department can and should exercise the full extent of its regulatory authority to limit this blatant abuse of our tax system by the ultrawealthy."
Their letter to the Treasury leader, dated Monday and first reported by CBS MoneyWatch Tuesday, highlights that "only the wealthiest American families" are asked to pay transfer taxes such as the estate tax, gift tax, and generation-skipping transfer (GST) tax.
As the letter lays out:
Tax avoidance through grantor trusts starts with the ultrawealthy putting assets into a trust with the intention of transferring them to heirs. Grantor trusts are trusts where the grantor retains control over the assets, and the structures of some of these grantor trusts allow the transfer of massive sums tax-free. Tax planning via grantor trusts, including grantor retained annuity trusts (GRATs), is a kind of shell game, with a wealthy person and their wealth managers able to pass assets back and forth in ways that effectively pass wealth to heirs while minimizing tax liability.
Some of the wealthiest families further compound this tax avoidance with perpetual dynasty trusts, which can be used to shield assets from transfer tax liability indefinitely. For example, aggressive valuation discounts can artificially reduce the value of assets transferred into a trust below the GST tax exemption threshold, after which the assets can grow in perpetuity within a trust exempt from transfer tax.
"The ultrawealthy at the top of the socioeconomic ladder live by different rules than the rest of America, especially when it comes to our tax system," the letter charges. "As the richest Americans celebrate and take advantage of these favorable tax opportunities, middle-class families struggle with inflation and Republicans threaten austerity measures and the end of Social Security and Medicare."
To help force the richest Americans to "pay their fair share" in taxes, the senators are calling on Treasury to revoke a pair of tax code rulings from the Internal Revenue Service (IRS); require GRATs to have a minimum remainder value; reissue family limited partnership regulations; clarify that intentionally defective grantor trusts (IDGTs) are not entitled to stepped-up basis; and put out clarifying regulations on certain valuation rules for estate and gift taxes.
The senators also sent a series of questions—about potential administrative action, how much is estimated to be held in grantor trusts, and how much could be raised from cracking down on abuse—and requested a response from Treasury by April 3.
Their letter comes after President Joe Biden earlier this month introduced a budget blueprint for fiscal year 2024 that would hike taxes on the rich—proposed policies praised by progressive experts and advocates as "fair, popular, and long overdue."
Yellen last week appeared before the Senate Finance Committee—of which Warren and Whitehouse are members—to testify about the administration's proposal. She said in part that "our proposed budget builds on our economic progress by making smart, fiscally responsible investments. These investments would be more than fully paid for by requiring corporations and the wealthiest to pay their fair share."
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The Richest Americans Need to Be Taught This Serious Lesson About Teachers
"If we can provide over a trillion dollars in tax breaks to the top 1 percent and large corporations," said Senator Bernie Sanders this week, "please don't tell me that we cannot afford to make sure that every teacher in America is paid at least $60,000 a year."
Feb 17, 2023
How can we measure the work a particular society truly values? Take-home pay can make as good a yardstick as any: The lower an occupation’s compensation, the lower the esteem a society is showing for that occupation.
In the United States, our pay data show, no profession faces a reality that makes this link plainer — and uglier — than teaching.
All sorts of metrics can help us measure the level of our society’s esteem for the teaching profession. Are young people, for instance, interested in becoming teachers? Between 2008 and 2019, teacher ed enrollments in the United States plunged by over a third. Are current teachers feeling valued? Between 2019 and 2022, teacher retirements and resignations rose 40 percent.
But nothing says “esteem” more directly than paychecks, and, by that metric, American society has for years been systematically devaluing the work teachers do. Between 1996 and 2021, the Economic Policy Institute’s Sylvia Allegretto detailed last August, average teacher weekly wages adjusted for inflation rose a miniscule $29. Over the same years, inflation-adjusted weekly wages for other college graduates rose over 15 times faster, up $445.
What has this shortfall in overall compensation and esteem meant for America’s schools? In the current school year, the U.S. Department of Education reports, every single state in the union has reported teacher shortages, with 46 states citing shortages of science teachers and 44 missing math teachers.
Overall, some 36,000 teaching positions nationwide are going vacant, with at least 163,000 additional positions getting “filled” with unqualified teachers. Both these numbers, concludes a study by researchers at Brown University’s Annenberg Institute, represent “conservative estimates of the extent of teacher shortages nationally.”
Some observers of our contemporary education scene are contending, Stanford’s Linda Darling-Hammond noted last month, that the teacher resignations and vacancies we’re experiencing shouldn’t particularly concern us because they appear mostly in certain subjects and parts of the country. But that amounts to arguing, Darling-Hammond observes, that a house isn’t on fire “because only three of its five rooms are burning.”
Our educational house most definitely is burning, U.S. Senator Bernie Sanders told a town hall on America’s teacher pay crisis at the U.S. Capitol earlier this week.
“I want the day to come, sooner than later, when we are going to attract the best and brightest young people in our country into teaching,” said Sanders. “I want those young people to be proud of the profession that they have chosen.”
All teachers, the Vermont senator believes, should be earning at least $60,000 a year. Some 43 percent of teachers currently fall short of that mark. In Florida, the average teacher earns less than $50,000, just $49,583.
How do the bargain-basement paychecks that go to teachers compare with compensation for other professions? Not well at all. In Florida, accountants make $76,320 annually, 54 percent more than teachers. And software developers in Florida average $105,200, 112 percent more.
But the most stunning pay contrasts show up when we contrast teacher pay to the compensation of our nation’s most generously rewarded power suits.
“The top 15 hedge fund managers on Wall Street,” notes Senator Sanders, “make more money in a single year than every kindergarten teacher in America — over 120,000 teachers.”
Sanders will soon be introducing legislation, the Pay Teachers Act, to ensure that all teachers make at least $60,000 annually and guarantee significantly higher pay for educators “who have made teaching their profession — working on the job for 10, 20, 30 years.”
Where could the funding for this teacher pay revolution come from? From a tax revolution.
Public schools across the nation have historically relied on the local property taxes that average Americans pay. Property taxes today are still supplying 40 percent of total public education funding. These taxes all fall on the primary source of wealth for average families, the owner-occupied home. But America’s rich hold most of their wealth in financial instruments, a category of wealth that essentially goes untaxed, even after death, since the current federal estate tax asks so little from families sitting on grand fortunes.
Senator Sanders has proposed a fix: a thorough-going reform of the federal estate tax. Rich married couples last year could exempt $23.4 million of their fortunes from all estate tax and pay no more than a 40 percent tax on any dollar of wealth above that. The Sanders legislation — the “For the 99.5 Percent Act” — would lower that estate tax exemption to $7 million per married couple and up the minimal estate tax rate on wealth above that level to 45 percent.
Wealthier estates would face even higher rates, with wealth over $1 billion facing a 65 percent estate tax.
The Sanders legislation also takes aim at current loopholes that lower the rate of estate tax that the families of dead deep pockets actually face. Over his legislation’s first 10 years, Senator Sanders notes, the federal treasury would collect an additional $450 billion in estate tax revenue, “precisely how much the Teacher Pay Act would cost.”
“Let’s be clear,” the senator added at the U.S. Capitol teacher pay town hall Monday. “If we can provide over a trillion dollars in tax breaks to the top 1 percent and large corporations, please don’t tell me that we cannot afford to make sure that every teacher in America is paid at least $60,000 a year.”
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