A new version of the Democratic nominee’s proposed tax plan, unveiled on Thursday, calls for a 65% tax on the largest estates – up from 45% in her previous plan – further limiting wealthy households’ ability to pass on assets to heirs.
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Known by conservative opponents as the “death tax”, the estate tax, levied on property transferred to heirs after its owner dies, now is imposed only on inherited assets worth $5.4 million or more for an individual. Sanders has released a statement in support of the tax plan, saying that “Secretary Clinton understands that it is appropriate to ask the top three-tenths of 1 percent…to pay their fair share of taxes”.
The estate tax increase and other new proposals from Mrs. Clinton would generate $260 billion over the next decade, enough to pay for her plans to simplify small business taxes and expand the child tax credit, according to the nonpartisan Committee for a Responsible Federal Budget, which advocates fiscal restraint. In 2014, there were only 223 estate-tax payers with reported estates valued at $50 million or more.
Politically, this new plan is created to encourage young voters that flocked to the Sanders campaign during the primary to consider supporting Clinton in the upcoming Presidential race.
Overall, according to The Wall Street Journal, the estate tax is a relatively small part of the federal tax code, bringing in about 1 percent of the government’s tax revenue.
The nonpartisan Centre on Budget and Policy Priorities said this month that only the estates of the wealthiest 0.2 per cent of Americans, about two out of every 1,000 people who die, now owe any estate tax because the first US$5.45 million per person is exempt.
But the combination of the 65% estate tax and the change to capital-gains rules could lead to significant increases in effective tax rates at death on some people – including, for example, Mr. Trump, who claims a net worth of $10 billion, though independent estimates put it lower. Supporters argue it is an essential tool to prevent the concentration of wealth in a few massively rich families.
Increased estate taxes aren’t the only major change Clinton wants.
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“Hillary Clinton has made a commitment throughout this campaign to make sure there is a plan to pay for the progressive policies we have laid out”, said Mike Shapiro, an economic adviser to Clinton.
