US presidential candidate proposes increasing taxes on wealthiest
Presidential candidate, Senator Bernie Sanders of Vermont, introduced on June 25 the Responsible Estate Tax Act which proposes increasing estate taxes for the wealthiest Americans.
Currently, the first USD5.4 million of an individual's estate (almost the first USD11 million of a married couple's estate) are exempt from the tax. The Bill, which aims to reduce "skyrocketing income and wealth inequality" recommends that the first USD3.5 million of an individual's estate (the first USD7 million of a married couple's estate) should be exempt from estate tax.
The so-called Sanders Bill would also establish a progressive tax rate: estates worth between USD3.5 million (or USD7 million for couples) and USD10 million would pay 45 percent estate tax; estates worth USD10 million to USD50 million would pay 50 percent; and estates worth USD50 million or more would pay 55 percent. The Bill also proposes that billionaires pay a 10 percent surtax – this, according to his campaign, would only affect 530 billionaires who have a combined wealth of USD2.6 trillion.
The Sanders Bill would also close tax loopholes which allow "billionaire families to set up dynasty trusts to avoid taxes" and which are used "by the wealthy to avoid estate taxes". President Obama made a similar pledge during his State of the Union Address in January this year which targeted what the administration calls "the largest capital gains loophole": under a provision known as the "stepped-up basis", capital gains on assets held until death are never subject to income taxes – allowing heirs to avoid capital gains tax on large inheritances.
Conversely Senator Rand Paul, who is also running for US presidency, indicated in a Wall Street Journal article that he would eliminate gift and estate taxes and all tax deductions except charitable giving and mortgage interest.
- On April 16, the House of Representatives voted in favour of the Republican-led Death Tax Repeal Act of 2015 to repeal the current 40 percent which tax applies to inherited assets worth USD5.4 million or more (USD10.86 million for couples).
- Sen. Bernie Sanders website
- US News
- STEP news story (January 20, 2015): President Obama announces plans to close tax loopholes
- Wall Street Journal (Login required)
- STEP news story (April 28, 2015): US House of Representatives votes to repeal estate tax
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