Sanders offers estate tax bill topping out at 77 percent

Sanders offers estate tax bill topping out at 77 percent
© Stefani Reynolds

Sen. Bernie SandersBernard (Bernie) SandersSanders expected to announce exploratory committee next week Bernie Sanders records announcement video ahead of possible 2020 bid Bill Maher to Dems: ‘Let’s not eat our own’ in 2020 MORE (I-Vt.), who is mulling a 2020 Democratic presidential bid, offered a bill on Thursday to expand the estate tax as progressive lawmakers discuss ways to increase taxes on the wealthy.

"Our bill does what the American people want by substantially increasing the estate tax on the wealthiest families in this country and dramatically reducing wealth inequality," Sanders said in a statement. "From a moral, economic, and political perspective our nation will not thrive when so few have so much and so many have so little."

Sanders introduced the legislation a few days after a number of Senate Republicans offered a bill to repeal the estate tax — a move the Vermont senator criticized, saying "it is literally beyond belief that the Republican leadership wants to provide hundreds of billions of dollars in tax breaks to the top 0.2 percent."

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The legislation also comes as prominent progressives, including Democratic presidential hopefuls, float new proposals to raise taxes on the very wealthy. Sen. Elizabeth WarrenElizabeth Ann WarrenDNC punts on measure to reduce role of corporate PAC money Bill Maher to Dems: ‘Let’s not eat our own’ in 2020 Newsom endorses Kamala Harris for president MORE (D-Mass.), who has announced a presidential exploratory committee, proposed a new annual "wealth tax" last week.

The tax-cut law that President TrumpDonald John TrumpGillibrand backs federal classification of third gender: report Former Carter pollster, Bannon ally Patrick Caddell dies at 68 Heather Nauert withdraws her name from consideration for UN Ambassador job MORE signed in December 2017 significantly increased the amount of money exempt from the estate tax, but did not eliminate it completely. For 2019, the estate tax applies to the value of estates worth more than $11.4 million for an individual. Amounts above the exemption level are taxed at a rate of 40 percent under current law.

Sanders's bill would lower the exemption amount for the estate tax and also create a progressive rate structure. The rate would be 45 percent for the value of an estate between $3.5-10 million, 50 percent for the value of an estate between $10-50 million, 55 percent on the value of an estate between $50 million and $1 billion, and 77 percent on the value of an estate that exceeds $1 billion.

Sanders's office said in a summary of the bill that the top estate tax rate had previously been 77 percent from 1941 to 1976.

The bill also includes provisions designed to take aim at strategies that wealthy people employ in an effort to minimize their estate tax bills, including curbing tax breaks for trusts and ending "loopholes" relating to valuation discounts, according to Sanders's office.

Additionally, the bill would allow family farmers to lower the value of their land by up to $3 million for estate tax purposes. Republicans and business groups often argue that the estate tax is harmful to family farmers, though few estates with small farms have paid the tax in recent years.

Sanders's office said that the families of America's billionaires combined would owe up to $2.2 trillion in estate taxes under the senator's bill. The senator's office estimated, using net worth figures from Forbes, that Trump would owe $2.16 billion.

Sanders floated a similar expansion of the estate tax during his 2016 presidential campaign, but at the time he proposed a top rate of 65 percent for billionaires. Hillary ClintonHillary Diane Rodham ClintonSanders expected to announce exploratory committee next week Bernie Sanders records announcement video ahead of possible 2020 bid Overnight Defense: Trump declares border emergency | .6B in military construction funds to be used for wall | Trump believes Obama would have started war with North Korea | Pentagon delivers aid for Venezuelan migrants MORE had a similar estate-tax proposal to Sanders, while Trump called for full repeal of the tax.

Polling has consistently shown that voters want the wealthy to be taxed more, but surveys from as recently as a few years ago have found the estate tax to be unpopular. A 2016 Gallup poll found that 54 percent of Americans supported proposals to eliminate the estate tax.