I have to thank the editorial staff at the WashPost for this one: Congress passed up an obvious policy tool to fix wealth inequality, pointing out the utter failure of congressional Democrats to revise our nation’s abysmal “keep the rich folks happy” non-tax on inheritances. As the Post notes, billionaire-bashing folks like Sens. Elizabeth Warren and Bernie Sanders, who keep threatening to kick Elon Musk’s butt, not to mention the outright (so they say) socialist “Squad”, aka Reps Ilhan Omar (MN), Alexandria Ocasio-Cortez (NY), Rashida Tlaib (MN) and Ayanna Pressley (MA), didn’t lift a pinky to stop the biggest non-stop on-going heist in American history. How much cash are we talking? The Post lays it on the line:
Cerulli Associates, a research and consulting firm, calculated last month that Americans will pass on some $72.6 trillion in inheritances over the next quarter-century, nearly half of which will come from the top 1.5 percent of households. That is after taxes. Some of the wealthiest estates — those from households with more than $5 million in investable assets — will pay a total of only $4.2 trillion in taxes on the massive windfall heading to their heirs. The estate tax is so riddled with exemptions and loopholes that only 0.04 percent of U.S. deaths resulted in the filing of estate tax returns in which inheritance tax was owed, and the effective tax rate paid was only 14.7 percent.
There is, quite arguably, no reason not to tax all inheritances over a minimal amount. The great moan is that you’re taxing money that has already been taxed. In the first place, about 40% is transferred as unrealized capital gains, which hasn’t been taxed. The second point is, the money coming to heirs comes to them as income, income on which they have paid no tax. What is an inheritance other than a lottery, that some of us win, through no virtue of our own? When my mother died, I inherited about $60,000 tax free. Why? If I had won the same amount in a lottery, I would have paid a considerable tax, because I fortunately had at the time quite a decent income. If I had been an only child, I would have inherited about $300,000—again, almost entirely tax free! Well, damn my siblings!
In addition to the grotesquely “generous” inheritance laws, there are any number of legal devices—“trusts” and such—that the rich can and do use to further evade taxation. These devices are only “legal” because Congress allows them to be so. But Liz and Bernie would rather talk trash in the form of personalized insults to Elon and Mark and Jeff and all of the rest of the big shots, while the Squad’s idea of socialism is a rent-controlled apartment—a rent-controlled apartment for, you know, themselves. Because have you seen the rents these days on something even half-way decent? Kill my landlord! Now!
Afterwords
It is the Republicans, of course, with their endless, and endlessly hypocritical whine about the “death tax” that managed to turn coddling trust fund babies into a moral crusade. But I thought we were “better” than them. Guess not.
Interesting article.
From a “damned sibling”