(Business Insider) - Bernie Sanders is once again calling for higher taxes on Americans who inherit millions.
- Sen. Bernie Sanders is once again calling for rich heirs to be taxed more on their inheritances.
- Sanders wants to expand the estate tax to 45% on estates worth at least $3.5 million.
- The amount exempted from estate tax essentially doubled under Trump's 2017 tax legislation.
Sanders, alongside Sen. Elizabeth Warren and Rep. Jimmy Gomez, is introducing new legislation targeting heirs who receive over $3.5 million. Called the For the 99.5 Percent Act, the proposal would levy a 45% tax on estates that are worth $3.5 million, and a 65% tax on estates worth over $1 billion. It's similar to legislation that Sanders has proposed in several iterations over the last few years, and it comes as some Republicans seek to roll back the estate tax entirely.
"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," Sanders said in a press release.
The amount of money exempt from the estate tax has increased significantly over the last two decades, according to the Tax Policy Center. In 2001, only the first $675,000 of an inheritance was tax-free, and that cutoff went up to $1 million by 2002. By 2009, it was at $3.5 million; after rising steadily, the exemption pretty much doubled under President Donald Trump's 2017 tax package, going from around $5.5 million in 2017 to $11.1 million in 2018.
Now, for 2023, the estate tax exemption stands at just under $13 million, a large bump from around $12 million in 2022. As of 2019, the most recent year that the IRS has data on, just 0.08% of adult deaths were eligible for the estate tax. The Tax Policy Center similarly found that fewer than 0.1% of people who would die in 2020 would owe estate tax. And the estate tax rate only goes up to 40% on estates that are worth a million dollars more than the exempted amount.
Sanders' proposal also targets loopholes that the ultra-wealthy can employ to shield their assets from taxation, like dynasty trusts that don't incur estate or gift taxes when the family doles out money from a passed-down trust.
However, like Sanders' previous attempts to hike taxes on the rich, the proposal is unlikely to make it far. Even when Democrats held both chambers of Congress, centrist sentiment stymied proposed hikes on big corporations and closing loopholes for private equity investors. Now, with tax-averse Republicans holding the House, any legislation to hike rates is likely dead on arrival.
By Juliana Kaplan
April 18, 2023
