Wednesday, February 6, 2019
The increase of the estate tax exemption in 2017 has been reiterated several times, with the new amount standing at $11.8 million, with a top rate of 40%. Democrats are posing a new policy for several presidential candidates that stipulate lowering the tax exemption amount back down and increasing the tax rate for the very wealthy.
Senator Bernie Sanders has an aggressive policy, stating he would decrease the federal estate tax exemption to estates worth $3.5 million, and imposing progressively higher rates that top out a 77% for billionaires. Sanders refers to the proposal as the “For the 99.8 Percent Act" because it would only effect the top .2% of American households.
The timing of using the estate tax to tap into the accumulated wealth of high-net worth citizens may work out better as billionaires are becoming elderly. The Forbes' list of 400 richest Americans include 128 individuals that are over the age of 75. Morbidly, this estate tax hike would slide in to intervene in the largest intergenerational transfer of wealth and pass a hefty chunk to the government. According the research of Equality of Opportunity Project, America’s one-percenters have a higher life expectancy of the mid-to-low 80s.
See Jordan Weissman, This Is a Great Time to Hike the Estate Tax, Because America’s Billionaires Are Getting Really, Really Old, Slate, February 1, 2019.
Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.