In-Depth: Sponsoring Rep. Jimmy Gomez (D-CA) introduced this bill to enact a progressive tax on the estates of the wealthiest Americans:
“The ever-widening gap between the ultra-rich and the rest of us has reached alarming proportions and demands a strong legislative response. No longer can we allow this structural power imbalance – one where the billionaire-class hoards the very wealth working families helped to create – define our nation’s values and priorities. Through my legislation – the For the 99.8% Act – we can take a progressive step forward in addressing our country’s rapidly increasing wealth inequality by strengthening the estate tax and ensuring the wealthiest among us pay their fair share. I’d like to thank Senator Bernie Sanders for joining me in our shared mission to level the economic playing field for the working-class and transform our economy into one that works for every American.”
Sen. Bernie Sanders (I-VT), sponsor of this bill’s Senate version, says:
“We are facing levels of inequality not seen since the Gilded Age of the robber barons, where the top one-tenth of one percent owns about as much wealth as the bottom 90 percent. The richest 400 billionaires pay lower taxes than everyone else. In my view, this obscene inequality in wealth and political power is not compatible with a democratic society. I am proud that Representative Gomez is leading three dozen members of the House in introducing the For The 99.8% Act to tax today’s dynasty trusts and curb their power, while raising trillions of dollars for the essential programs we need as a country.”
Americans for Tax Fairness is one of 80 organizations that supports this bill. Its executive director, Frank Clemente, says:
“If we are going to create an economy that works for all of us, not just the wealthy few, America needs to create a fair share tax system. The For the 99.8% Act is a critical step towards that goal. It will raise well over $300 billion that can be used to help people afford healthcare, improve our schools and rebuild crumbling infrastructure across the country. It’s high-time the wealthy and their multi-million-dollar estates start paying their fair share.”
Charlie Simmons, a retired tech executive and a member of the advocacy group Patriotic Millionaires, supports this bill. He says:
“Tax my estate. Trust fund babies who have done nothing to earn their wealth besides being born into the right family have no right to pay a lower tax rate on their millions than hard working Americans do on the income that they work for."
Opponents of the estate tax argue that it constitutes “double taxation,” imposing a second tax on assets that are already taxed when they’re initially earned as income or capital gains. They also claim that it would threaten small farms or family businesses because the value of the real estate or the business makes the estate taxable. Finally, they argue that wealth taxes are an “especially pernicious” form of taxation because the accumulation of capital is the key to long-term productivity and economic growth; and taxing wealth discourages capital accumulation.
Bill Smith, managing director of the National Tax Office at CBIZ MHM, is skeptical about this bill’s prospects:
“Even if you put the wealth tax in place, would you have the billionaire’s equivalent of people leaving the country, which is what happened in France? It might be a little bit different over here because of the way the EU is structured now. It’s easy to become a citizen of another EU country and subject to their tax regime without going back to your home country. Puerto Rico is the sexy topic for rich people fleeing the country. You can’t be in this country for 183 days without paying your tax. If people leave, they have to commit to leave. If you’re a billionaire, that makes it easier. I think the wealth tax is a pretty tough sell. Unless the House or the Senate flips, it’s going to be very tough to get any tax legislation through. If it’s a big earth-shattering move like Elizabeth Warren’s wealth tax, you can even lose people in your own party. A lot of the donors are going to be subject to the tax. It could really impact real estate because so many people who are wealthy from real estate are not paying so much in tax because of their ability to generate deductions.”
This legislation has 37 Democratic House cosponsors. Its Senate companion, sponsored by Sen. Bernie Sanders (I-VT), has one Senate cosponsor, Sen. Kirsten Gillibrand (D-NY).
80 organizations, including the AFL-CIO, Amalgamated Transit Union (ATU), American Postal Workers Union (APWU), the International Brotherhood of Teamsters (IBT), and Public Citizen, support this legislation.
Of Note: The Institute on Taxation and Economic Policy and the Tax Policy Center say that this bill would still exclude all but a few tenths of one percent of families from ever paying an estate tax. In 2015, the Institute on Taxation and Economic Policy (ITEP) estimated that a similar bill would raise $336 billion over 10 years.
Summary by Lorelei Yang(Photo Credit: iStockphoto.com / Dean Mitchell)