As the gap between America's richest 1% and the rest of the country continues to widen, conservative politicians have weakened one of the best tools for combating economic inequality. That tool is the federal estate tax on family fortunes. We should strengthen this tax so the wealthy start paying their fair share.
That's why I have introduced the "For the 99.8% Act," a bill that would strengthen the estate tax so it can restore a measure of fairness to the tax code. An estate tax is levied on the value of a deceased person's estate before it's distributed to the heirs. The bill's title refers to the 99.8% of families whose estates won't pay a nickel in taxes under this proposal but will benefit from the revenue raised instead.
The measure, which is companion legislation to the bill introduced by Sen. Bernie Sanders earlier this year, would restore the estate tax to its 2009 levels. A decade ago, estates held by individuals that were worth at least $3.5 million ($7 million for couples) paid the estate tax. Today, due to the Tax Cuts and Jobs Act that came into effect in 2018, estates aren't taxed unless they are worth at least $11.4 million or $22.8 million for couples for the 2019 tax year.
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While many factors are involved in the growth of income and wealth inequality, the weakening of the estate tax has been a contributor. Though it doesn't prove causation, it's a fact that the decreasingly effective estate tax of the past 50 years has accompanied an increasingly unequal society. Economists and other experts have noted.
Over the next half century, as the estate tax withered, those shares of national income nearly reversed, with the top 1% now getting a fifth of all income and bottom half only a little over 10%.
In 1970, over 5% of all estates were taxable and every dollar in an estate over $10 million was taxed at a rate of 77%. At that time, the bottom half of American society received about a fifth of all the income in the country, around twice as much as the wealthiest 1%. Over the next half century, as the estate tax withered, those shares of national income nearly reversed, with the top 1% now getting a fifth of all income and bottom half only a little over 10%.