Saturday, September 24, 2016

Hillary Clinton wants a top estate tax rate of 65 percent — the highest since 1982

Updated by Dylan Matthews  @dylanmatt  dylan@vox.com Sep 23, 2016, 1:00p

On Thursday, Hillary Clinton did something very unusual for a candidate in a general election race: She proposed a significant new tax increase.

Naturally, this was a tax hike that will affect very few Americans. Clinton essentially adopted a proposal from her old primary rival Bernie Sanders to substantially raise estate tax rates, setting a top rate of 65 percent. Basically nobody pays the estate tax; in 2013, nearly 2.6 million people in the US died, and only 4,687 of them paid the tax. That's only 0.18 percent of deaths. And those who did pay it were overwhelmingly rich; it’s the most progressive tax in the federal code, and the first $5.45 million of an estate, or $10.9 million for couples, is totally exempt from taxation.

But Clinton’s move is notable all the same. She had unveiled a proposal to raise the tax in January, but it would've only raised the top rate to 45 percent from the current 40 percent. Now she's joining Sanders in going all the way up to 65 percent, a rate that would only apply to estates worth more than $500 million ($1 billion for couples).

The Clinton/Sanders proposal wouldn’t change the fact that very few Americans pay the tax. Both have only proposed reducing the exemption to $3.5 million per person, which is very high by historical standards. (Back in 2001, it was only about $900,000.)

That said, 65 percent would be the highest rate in more than three decades, and would represent a significant move in the federal tax code toward treating the ultra rich differently than the merely rich.

The estate tax is at historic lows — and the Clinton/Sanders plan wouldn’t change that
The estate tax isn’t the lowest it’s ever been. It reached that milestone back in 2010, when it hit a rock-bottom top rate of 35 percent. Even that was an increase, as the Bush tax cuts of 2001 had originally slated the tax to expire entirely that year; it was only through a deal with Senate Republicans that President Obama was able to reimpose the tax that year, avoiding a perverse situation where it was in families’ interest for relatives to schedule their deaths in 2010 rather than 2011. Then in 2012, as part of another tax deal, the rate bumped up to 40 percent again.

Read more
http://www.vox.com/2016/9/23/13030616/hillary-clinton-estate-tax-sanders

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