A Few Senators Would Like Billionaires to Pitch in with the Deficit Problem
The latest act in the ongoing circus known as the estate tax debate has three “liberal” senators – Bernard Sanders (I-VT), Tom Harkin (D-IA), and Sheldon Whitehouse (D-RI) – calling for billionaires to help close the $13 trillion some-odd federal deficit that these über-rich people ate.
Forbes reports that the Messrs. Sanders, Harkin and Whitehouse sent a letter to their fellow Senators laying out their case, “According to Forbes Magazine, there are only 403 billionaires in the U.S. with a collective net worth of $1.3 trillion. Clearly, the heirs to these multibillion fortunes should be paying a higher estate tax rate than others.”
The champs of the bill also go to the trouble of singling out Dan L. Duncan whose family stands to inherit his $9 billion fortune tax free. It’s a good thing those staffers pointed out that article in the Times to their respective Senators!
Anyhoo, TaxProf summarizes the details of the “Responsible Estate Estate Tax Act”:
• Exempts the first $3.5 million of an estate from federal taxation ($7 million for couples), the same exemption that existed in 2009. Doing this would mean that 99.75% of all estates would be exempted from the federal estate tax in 2011 alone.
• Includes a progressive rate structure so that the super wealthy pay more. Under our bill, the rate for the value of the estate above $3.5 million and below $10 million would be 45%, the same as the 2009 level. The rate on the value of estates above $10 million and below $50 million would be 50%, and the rate on the value of estates above $50 million would be 55%.
• Includes a billionaire’s surtax of 10%. Our bill also imposes a 10% surtax on the value of an estate above $500 million ($1 billion for couples). According to Forbes Magazine, there are only 403 billionaires in the United States with a collective net worth of $1.3 trillion. Clearly, the heirs to these multi-billion fortunes should be paying a higher estate tax rate than others.
• Closes all of the Estate and Gift Tax Loopholes requested in President Obama’s Fiscal Year 2011 budget. These loophole closers include requiring consistent valuation for transfer and income tax purposes; a modification of rules on valuation discounts; and a required 10-year minimum term for Grantor Retained Annuity Trusts (GRATS). OMB has estimated that closing these loopholes that benefit the super-wealthy, would raise at least $23.7 billion in revenue over 10 years.
• Protects family farmers by allowing them to lower the value of their farmland by up to $3 million for estate tax purposes. Under current law, the value of farmland can be reduced up to $1 million for estate tax purposes under § 2032(a) (Special Use Valuation). Our bill increases this level to $3 million and indexes it to inflation.
• Benefits farmers and other landowners by providing estate tax relief for conservation easements. Our bill provides tax relief to farmers and other landowners by amending estate tax rules for conservation easements through an increase in the maximum exclusion amount to $2 million and increasing the base percentage to 60%.
Nice work on those last two Senator Harkin; you couldn’t be more obvious.
In case you didn’t catch it in there, the estate tax on the billionaires will be 55% PLUS! an additional 10% surtax. Sounds crazy right? Congress royally fucks things up by letting the estate tax expire in the first place and then has the stones to throw the double whammy on the rich because of it. Had they simply extended the estate tax (which seems to be a popular solution, btw) this political pigskin wouldn’t even be an issue.
But guess what? There are people behind this thing lock, stock and barrel. For one, the United for a Fair Economy (“UFE”) more or less says that this legislation is the catalyst to fixing everything, “The Sanders-Harkin-Whitehouse Responsible Estate Tax Act is an important step on the road to an economic recovery that benefits all Americans.”
Well, not all Americans.