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house Bill H.R. 4857

Should the 'Death Tax' Have Progressive Brackets & Apply to More Americans?

Argument in favor

The gap between the ultra-rich and everyone else is exacerbated by the ease of passing assets between generations without any tax implications. Imposing an estate tax on the top estates (those worth over $3.5 million) would increase revenue for the government and ensure that the wealthy pay their fair share of taxes.

burrkitty's Opinion
···
11/06/2019
This is fine but also DOUBLE THE CAPITAL GAINS TAX. Either that or tax capital gains and dividends as regular income (no special lower rate). The special treatment of capital gains is, like much in the tax code, a crony special interest benefit to a narrow class of real estate and private equity investors.
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11/06/2019
Yes, it seems very unfair that those with the most pay the least. Goes to show you if you have enough money you can sway politicians to change the tax laws in your favor. This is been going on since the 60s when they really started pushing to ease the taxes on the rich and has progressed from then until now.
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jimK's Opinion
···
11/06/2019
Yes, I support the concept of ‘wealth’ taxes generally and the escalating tax rates on large inheritances. The income gap between our wealthiest and the rest of us has grown substantially under trump and this is simply not conducive to a sustainable growing economy. I do feel that this particular tax needs to be part of a broader plan that generally supports all of our people and enables the ‘least’ of us to have the opportunity for financial success as part of our country’s unique ’American Dream’. This will require monitoring to ensure unlawful wealth transfers are not employed such as trump’s father paying trump hugely unrealistic property maintenance fees as a way of transferring wealth without being taxed. I also generally support other poster’s suggestions that Capital gains tax rates be increased, but with one caveat; that these taxes turn-on after some cumulative annual disbursement so to not unduly harm retiree’s who are living off of their 401K lifetime contributions. I like many others are or will be, am faced with legally mandated withdrawals from an IRA which exceed my current needs and are taxed as income when withdrawn. These represent contingency funds to help recover from unanticipated medical expenses, home repair costs or other emergencies. Since my need is not immediate, I have chosen to put the excess funds into risk-adverse mutual funds which I hope will have returns in excess of the minuscule interest on savings accounts. I can guarantee that no-one would consider me wealthy; I tell my kids the only thing they are guaranteed to inherit will be my debt. However, I would not like to be unduly punished for trying to be responsible. I think small businesses such as family run farms could also unduly suffer without some realistic caps on capital gains taxes even though I feel these taxes should be increased for our wealthiest who can and do hide income inside of their investments.
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Argument opposed

Death shouldn’t be a taxable event, but this bill would make more American families subject to the estate tax and increase the government’s take from their inheritance. The steep tax rates this bill would impose on the wealthy would encourage them to find loopholes or move out of the U.S. to avoid the tax, both of which hurt economic efficiency.

Joseph 's Opinion
···
11/06/2019
No!!!! Stop taxing us to death!!!! Quit wasting my money when you do!!!! Balance the budget!!! Be responsible with money that isn’t yours!!!! All of you in Congress are horrible Stewards of what belongs to the people of the United States!!!
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Kelly 's Opinion
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11/06/2019
I disagree. Everything in the estate has already been taxed on way or another. To be taxed again is just being greedy. I have never understood that tax or the inheritance tax. Again a sign of greed.
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Ronald's Opinion
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11/06/2019
Repeal death taxes. estate money, and property has ben taxed, often several times. Heirs, not government should get this money.
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bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
  • The house has not voted
      house Committees
      Committee on Ways and Means
    IntroducedOctober 24th, 2019

What is House Bill H.R. 4857?

This bill — the For the 99.8% Act — would enact a progressive tax on the estates of the wealthiest Americans and lower the exemption threshold from the estate tax (aka the “death tax”). It would allow estates below $3.5 million per person ($7 million per couple) to pass without the inheritance tax while enacting a sliding tax scale on inheritances over $750,000. This tax scale would have five tiers, increasing the tax rate as the inheritance amount increases. Under current law, individuals can leave up to $11.4 million to heirs through their estates before the money is taxed and amounts above that level are taxed at a 40% tax rate.

Under this bill, the following sliding scale for estates would be enacted: 

  • Estates over $750,000 but not over $3.5 million: tax of $248,300 plus 39% of the excess of the amount over $750,000.
  • Estates over $3.5 million but not over $10 million: tax of $1,320,800 plus 45% of the excess of the amount of $3.5 million.
  • Estates over $10 million but not over $50 million: tax of $4,245,800 plus 50% of the excess of the amount over $10 million.
  • Estates over $50 million but not over $1 billion: tax of $24,245,800 plus 55% of the excess of the amount over $50 million.
  • Estates over $1 billion: tax of $546,745,800 plus 77% of the excess of the amount over $1 billion.

This bill would also reduce the gift tax exclusion amount to $1 million and increase the value limit for land subject to conservation easements to $2 million. It would also eliminate the generation-skipping transfer tax exemption for certain types of trusts.

Finally, this bill would simplify the gift tax exclusion for annual gifts to make the first $10,000 of any gifts made in a calendar year tax-free. This would include 1) a transfer in a trust, 2) a transfer of an interest in a passthrough entity, 3) a transfer of an interest subject to a prohibition on sale, and 4) any other property transfer that can’t immediately be liquidated by the recipient.

To protect family farms, this bill would allow them to lower their assessed value on farmland by up to $3 million.

Impact

Estate tax; estates worth over $3.5 million; taxation on estates worth over $3.5 million; and the gift tax exclusion.

Cost of House Bill H.R. 4857

A CBO cost estimate is unavailable.

More Information

In-DepthSponsoring 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 NoteThe 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.


Media:

Summary by Lorelei Yang

(Photo Credit: iStockphoto.com / Dean Mitchell)

AKA

For the 99.8 Percent Act

Official Title

To amend the Internal Revenue Code of 1986 to reinstate estate and generation-skipping taxes, and for other purposes.

    This is fine but also DOUBLE THE CAPITAL GAINS TAX. Either that or tax capital gains and dividends as regular income (no special lower rate). The special treatment of capital gains is, like much in the tax code, a crony special interest benefit to a narrow class of real estate and private equity investors.
    Like (81)
    Follow
    Share
    No!!!! Stop taxing us to death!!!! Quit wasting my money when you do!!!! Balance the budget!!! Be responsible with money that isn’t yours!!!! All of you in Congress are horrible Stewards of what belongs to the people of the United States!!!
    Like (69)
    Follow
    Share
    Yes, it seems very unfair that those with the most pay the least. Goes to show you if you have enough money you can sway politicians to change the tax laws in your favor. This is been going on since the 60s when they really started pushing to ease the taxes on the rich and has progressed from then until now.
    Like (56)
    Follow
    Share
    Yes, I support the concept of ‘wealth’ taxes generally and the escalating tax rates on large inheritances. The income gap between our wealthiest and the rest of us has grown substantially under trump and this is simply not conducive to a sustainable growing economy. I do feel that this particular tax needs to be part of a broader plan that generally supports all of our people and enables the ‘least’ of us to have the opportunity for financial success as part of our country’s unique ’American Dream’. This will require monitoring to ensure unlawful wealth transfers are not employed such as trump’s father paying trump hugely unrealistic property maintenance fees as a way of transferring wealth without being taxed. I also generally support other poster’s suggestions that Capital gains tax rates be increased, but with one caveat; that these taxes turn-on after some cumulative annual disbursement so to not unduly harm retiree’s who are living off of their 401K lifetime contributions. I like many others are or will be, am faced with legally mandated withdrawals from an IRA which exceed my current needs and are taxed as income when withdrawn. These represent contingency funds to help recover from unanticipated medical expenses, home repair costs or other emergencies. Since my need is not immediate, I have chosen to put the excess funds into risk-adverse mutual funds which I hope will have returns in excess of the minuscule interest on savings accounts. I can guarantee that no-one would consider me wealthy; I tell my kids the only thing they are guaranteed to inherit will be my debt. However, I would not like to be unduly punished for trying to be responsible. I think small businesses such as family run farms could also unduly suffer without some realistic caps on capital gains taxes even though I feel these taxes should be increased for our wealthiest who can and do hide income inside of their investments.
    Like (45)
    Follow
    Share
    I disagree. Everything in the estate has already been taxed on way or another. To be taxed again is just being greedy. I have never understood that tax or the inheritance tax. Again a sign of greed.
    Like (39)
    Follow
    Share
    Yes, to the progressive estate tax. “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.” Thank you SenatorSanders for sponsoring this bill and for your relentless fight for the working people of the USA!
    Like (37)
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    The rich keep getting all the tax breaks, time to require them to pay in as much as we do
    Like (28)
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    The wealthy should pay their fair share.
    Like (28)
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    Repeal death taxes. estate money, and property has ben taxed, often several times. Heirs, not government should get this money.
    Like (26)
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    You already taxed all that money.
    Like (21)
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    No this is another way the government steals taxpayers money and especially cruel as it is at someone’s death they steal your money. This should be repealed altogether.
    Like (20)
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    Loopholes need to be closed too. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.” A. Lincoln
    Like (16)
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    Seems like the wealthy always find a way around any legislation. Bezos is building his New York mansion while he takes insurance from employees at Whole Foods.
    Like (15)
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    Absolutely!
    Like (14)
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    The estate tax has been essential to democracy from the very beginning of our nation.
    Like (14)
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    Are you insane? These are huge taxes. The government takes half of what you make your whole life while you struggle to build a modest business. Then they take half what you have left when you die. Yeah screw your family, everything you created belongs to the government.
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    Why pay a tax on income that has already been taxed. Just because you didn’t work enough to leave your heirs an inheritance, why penalize some one who did, it seems to me that some of you are just looking for a way to take from those who have the intestinal fortitude to work hard and leave sometime for their kids.
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    Let’s have fair taxation while folks are alive. End the loopholes that reduce the taxes the wealthy pay. If the $50000 wage earners pay 29%, everyone over $50,000 should pay a minimum 29%. This should apply to wages, capital gains, and inheritance. That’s FAIR TAXATION
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    Yes! It’s well past time for the billionaires to pay their fair share!
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    The death tax is absolutely ridiculous. How about we stop waisting money, gain some accountability, pass a working budget, stop waging war on foreign soil, and hold our politicians to their sworn vowels. They need to start working for us. It has been the other way around for far too long.
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