As the race for the 2020 Democratic nomination heats up, a number of contenders have tried to stake their claim as progressive tax champions. Two frontrunners, Senators Bernie Sanders and Kamala Harris, have recently made increases to the estate tax central pieces of their campaign policy. Let’s take a closer look at these plans to fix the estate tax and why they’re exactly the kind of tax plans that this country needs.
Senator Kamala Harris’ Plan:
Sen. Harris plans to strengthen the estate tax by returning it to its old rate, closing tax loopholes, and giving those new funds directly to teachers. The GOP tax bill passed last year doubled the exemption levels (the amount your estate can pass on without paying any tax at all) on wealthy estates to $11.2 million. This means you could inherit $11,200,001 and only pay 40 cents total in estate tax. Unlike wealthy heirs to multi-million dollar fortunes, many teachers have to work second jobs to keep afloat. By lowering exemption levels to pre-GOP tax cut amounts of $5.5 million and along with some federal and state funding, Harris hopes to give educators a significant pay increase. Her plan seeks to fix the systemic issue of underpaid teachers by proposing to give teachers an average raise of $13,500.
Senator Bernie Sanders’s Plan:
Sanders’s For the 99.8% Act offers a tiered progressive approach to fixing the estate tax which includes lowering the exemption levels and increasing the taxation rate. His multi-tiered expansion would create a more equitable system that taxes the rich according to their degree of wealth. The lowest tier taxes estates from $3.5 million to $10 million at 45%, while the highest tier was raised to tax estates over a billion dollars at 77%. Senator Sanders’s team reports that his plan will raise around $2.2 trillion from 588 billionaires within 10 years.
Both of these proposals are sure to receive massive pushback from conservative donors and politicians who are dedicated to protecting the tax-free inheritances by misleading the public about the estate tax, but it’s important to remember that the estate tax only affects the richest 1,800 families (.02% of Americans). Despite outlandish claims from the GOP that it targets small business and family farms, an HSBC survey found that the average American retiree leaves $177,000 to their heirs. This doesn’t even come close to either candidate’s estate tax expansion or the current law. Hard working Americans are struggling from a lack of healthcare, poverty wages, and increasing wealth inequality. So why should the wealthy be exempt from being taxed on their income like everyone else just because they were born into the right family?
The estate tax provides a way to curb income inequality by limiting the amount of obscene wealth that can pass to the next generation. As wealth continues to accumulate in a small number of wealthy elites, so too does their political power. Deterring the creation of a hereditary aristocracy safeguards our democracy from their disproportionate influence.
Regardless of whether you prefer the Sanders plan, the Harris plan, or some other plan entirely, it’s clear we need to increase the estate tax. Wealthy Americans have evaded paying their fair share for too long. After all, as a nation founded on rejecting a system of inherited wealth and power, wouldn’t a system that levels the playing field and lifts up the underprivileged be the most American way forward?
