On the "Estate Tax"

Robert Reich

A few days ago White House National Economic Council director Gary Cohn, the former Goldman Sachs president, said "only morons pay the estate tax.” His comment reminded me of billionaire Liona Helmsley's comment that "only the little people pay taxes."

What Cohn was getting at is how easy it is nowadays for the wealthy to shield their fortunes from the estate tax. The tax applies only to estates over $11 million per couple, and wealthy families use estate planners to put stash away everything above this into trust funds that can be handed down to their heirs without tax.

Also, heirs don’t have to pay capital gains on assets that have increased in value during the lives of their wealthy parents – mansions, stocks, bonds, yachts, limos, paintings. The tax code erases all these gains, and allows heirs to price them at what they’re worth when heirs receive them -- thereby eliminating all capital gains.

Cohn’s “moron” comment should be a wakeup call. The estate tax and capital gains laws were originally designed to prevent the growth of large dynasties in the U.S. and to reduce inequality. They're no longer doing that because they've been whittled back by lobbyists for the rich.
Yet America is now on the cusp of the largest inter-generational transfer of wealth in our history, as billionaire boomers start dying off and leave vast wealth to their children.

Dynastic wealth has already taken over much of our politics, but it will take over all of it if we're not careful. We must raise the estate tax, and eliminate the “stepped-up-basis-at-death” rule that allows heirs to avoid capital gains taxes. Or else we lose our democracy completely.

Trump and the Republicans won't do this, and not even Democrats will unless pushed. But put this on your bucket list of to-do's.

Source
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