While the Republican presidential candidate talks about eliminating the death tax altogether, the Democrat presidential candidate promises to raise it even further than her initial suggestion. This seems to be Hillary’s latest leftward lunge as she attempts to appeal to Bernie voters who appear to believe that once you die, your money belongs to them the state.
The IRS calls the estate tax (aka death tax) “a tax on your right to transfer property at your death.”
Hillary wants the death tax to be higher, all the better to manage your right to transfer your property at your death.
In a nod to potentially disaffected supporters of her primary opponent Bernie Sanders, Democratic presidential candidate Hillary Clinton on Thursday proposed raising the top estate tax rate to 65%. This policy stands in stark contrast to that of her Republican opponent Donald Trump, who would repeal the “death tax,” as his website refers to it, but tax capital gains held until death.Estate taxes are a contentious issue that generates strong partisan reactions, and the issue is likely to come up in Monday’s debate between the candidates.Clinton previously advocated a 45% top rate on inheritance, but has now adopted the 65% rate Sanders called for during the primaries and beforehand in the Senate. The current top rate is 40%, with the first $5.45 million exempt. Clinton’s previous proposals would lower the current exemption – which her websites describes as almost $11 million, a reference to the exemption enjoyed by couples – to $3.5 million. The 65% top rate would only apply to individual estates of over $500 million ($1 billion for couples), which according to the campaign represent the wealthiest 4 of every 1,000 estates.According to the Tax Foundation, fewer than a dozen estates per year would be taxed at the top rate under this “largely symbolic” change. Using the Forbes billionaires list, the Tax Foundation’s Scott Greenberg estimates that Clinton’s estate tax would raise $600 million in the first year after its enactment, a “drop in the bucket.”
One of the (many) problems with the death tax is that it doesn’t affect the exceedingly wealthy, who set up foundations, trusts, etc. Instead, it affects farmers whose wealth is tied to their land and small businesses whose wealth is tied to their small business. The “cash rich” are protected.
The Wall Street Journal opines:
Though she defeated Bernie Sanders in the primary, she is adopting the socialist’s death-tax rate structure. She’d tax all estates over $10 million at 50%, apply a 55% rate on estates over $50 million, and go to 65% on assets above $500 million. The 65% rate would be the highest since 1981 and is another example of how she is repudiating the more moderate policies of her husband and the Democrats of the 1990s.The left claims only the super-wealthy will pay high rates, but the Sanders plan that Mrs. Clinton is copying did not index exemption levels for inflation. One reason a bipartisan movement emerged to reform the death tax in the 1990s was because the then 55% rate engulfed ever more taxpayers over time. Mrs. Clinton would also end the “step-up in basis” on stock valuations for many filers, triggering big capital gains taxes for a much broader population.She also knows most of her rich friends will set up foundations, as she and Bill Clinton have, to shelter most of their riches from the estate tax. As Americans have learned, these supposed charities can be terrific vehicles for employing political operatives while they wait for Chelsea to run for the Senate.
With reports that Trump is taking the upcoming presidential debate seriously and is preparing for it in a number of ways, I’m popping popcorn for Monday night’s debate.
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