The Importance of a Graduated Inheritance Tax
posted by Frank Pasquale
Bernie Sanders makes some valuable points in The Nation this week:
The 400 richest families in America, who saw their wealth increase by some $400 billion during the Bush years, have now accumulated $1.27 trillion in wealth. . . . During the last fifteen years, while these enormously rich people became much richer their effective tax rates were slashed almost in half. While the highest-paid 400 Americans had an average income of $345 million in 2007. . . they now pay an effective tax rate of 16.6 percent, the lowest on record.
Last year, the top twenty-five hedge fund managers made a combined $25 billion but because of tax policy their lobbyists helped write, they pay a lower effective tax rate than many teachers, nurses and police officers. As a result of tax havens in the Cayman Islands, Bermuda and elsewhere, the wealthy and large corporations are evading some $100 billion a year in U.S. taxes.
Whatever our nation’s tax future, these are vital facts to consider during the debate. Sanders has proposed the “Responsible Estate Tax Act (S.3533),” which would “raise $318 billion over the next decade by establishing a graduated inheritance tax on estates over $3.5 million.” Deficit hawks should applaud his approach.