Sen. Bernie Sanders, with Senator Elizabeth Warren and Representative Jimmy Gomez, are introducing new legislation targeting heirs who receive over $3.5 million. Named the: For the 99.5 Percent Act,” the proposed bill would impose a 45% tax on estates worth $3.5 million and a 65% tax on estates worth over $1 billion.
It’s similar to legislation that Sanders has tried to get passed in several variations over the last few years. It comes as some Republicans seek to roll back the estate tax entirely, says Insider’s recent article entitled, “Bernie Sanders once again wants to raise taxes on rich heirs.”
“It is unacceptable that working families across the country today are struggling to file their taxes on time and put food on the table while the wealthiest among us profit off of enormous tax loopholes and giant tax breaks,” Sanders said in a press release.
The amount of money exempt from the estate tax has increased significantly over the last two decades. For 2023, the tax exemption stands at just under $13 million, a large bump from around $12 million in 2022.
As of 2019, the most recent year for which the IRS has data, only 0.08% of adult deaths were eligible for the estate tax. The Tax Policy Center likewise saw that fewer than 0.1% of people who would die in 2020 would owe estate tax. The estate tax rate only goes up to 40% on estates worth a million dollars more than the exempted amount.
The senator’s proposed legislation also seeks to address the loopholes that the ultra-wealthy can use to protect their assets from taxation, like dynasty trusts that don’t incur estate or gift taxes when the family doles out money from a passed-down trust.
However, like Sanders’ previous attempts to hike taxes on the rich, the proposal is unlikely to make it far.
Even when Democrats held both chambers of Congress, centrist sentiment stalled proposed hikes on big corporations and closing loopholes for private equity investors.
With tax-averse Republicans holding the House, any legislation to hike rates will not be successful.
Reference: Insider (April 18, 2023) “Bernie Sanders once again wants to raise taxes on rich heirs”