Economic inequality is one of our biggest problems as a society, and it’s ruining our health. But it’s hard to write headlines about something that gets incrementally worse every day, instead of making a dramatic, newsworthy entrance. Bernie Sander’s campaign struck a chord by focusing on income inequality, and Trump garnered popularity by addressing workers on the losing end of the economy (though, I would argue, not with actual solutions).
I wish I could write a column about the perfect solution to income inequality. But a problem with many causes, needs multiple solutions. A lot of opportunity exists within the tax code to address these problems. The current administration either views income inequality as a benefit to society that should be boosted through the tax code, or simply does not care about anyone outside the 1%. We know this, because virtually everything in Trump’s tax proposal is regressive and would worsen income inequality.
There’s no shortage of topics to tackle with regards to the proposal (if that’s what you can even call the incomplete bullet list the White House sent out) but I’d like to focus on what I think should be an economic justice rallying cry: The Estate Tax.
First, a word on language. The right coined the term “tax burden,” as a very clever strategy in shaping our feelings on taxation. I personally refuse to use this phrase, and here’s why: it’s a manipulation. When you call any kind of tax under any circumstance a “burden,” it automatically frames the tax-cutter as the hero and the tax keeper or tax-raiser as the enemy. It’s a biased phrase on its face.
But taxes help our society function. They pave our roads, educate our children and protect our health and safety. They also reflect our values. I grew up in Massachusetts. My home state has long had a reputation for high taxes. But guess what else it has? The best public schools in the country. Universal healthcare for every resident. The only public art school in the nation (Mass College of Art). It also was the first to legalize gay marriage, and long before that, the first to recognize the suicide epidemic among gay teenagers and put in place the first Governor’s Commission on Gay and Lesbian Youth – those things are not related to taxes, admittedly, but I would argue that like taxation rates, the social programs of Massachusetts have been based on peer-reviewed research and an analysis of facts. I’m proud of the values that my “high-tax” home state reflect. And the citizens of Massachusetts have collectively decided, by voting, that these are the values they support, with their tax dollars.
So back to the Estate Tax. Much like the phrase “tax burden,” the right has tried to popularize the misleading term “death tax.” But death happens to all of us, and the Estate Tax does not. Here are the facts: 99.8% of all inheritances in the US are tax-free. The estate tax affects you only if you are in the top .2% – when your estate is over $10.9 million (if married) or $5.45 million (if single). Does this mean that if you leave your children $10,900,001 that suddenly you will be fully taxed on all that money? No. It means that you will be taxed only on that one dollar that is over the limit. So everyone – including the super-wealthy – gets to pass $10,900,000 on to their children tax-free. The Estate Tax only affects those dollars over the limits. So think about who that touches. It’s not small businesses, it’s not farmers, and it’s not the well-to-do or even the wealthy. It’s a tax on the ultra-wealthy— a Tycoon Tax.
The Estate Tax reflects the values that Americans hold dear: fairness, merit, and rewards for hard work. It was established in 1916, by Teddy Roosevelt, to limit the formation of an American aristocracy – a group of wealthy, powerful families who never had to know the meaning of work, and who could remove themselves from interaction with the general populace behind a fortress of inherited wealth.
Many modern-day billionaires support the Estate Tax, such as Bill Gates, Ted Turner and George Soros. Warren Buffett said in a 2001 New York Times article, ”We have come closer to a true meritocracy than anywhere else around the world. You have mobility so people with talents can be put to the best use. Without the estate tax, you in effect will have an aristocracy of wealth, which means you pass down the ability to command the resources of the nation based on heredity rather than merit.”
This is a country founded on an ideal of equal opportunity. Yet the wealth gap threatens the very economic mobility that makes our country great. And cuts to health care and education further stagnate this mobility. The Estate Tax will not halt the ever-widening wealth gap. But it can slow it down, and it can help fund the healthcare and education that people need to have equal opportunity. It’s a tax that assists and reflects our deepest-held American values.
Don’t let Republicans cut the Estate Tax. It is a benefit to our society and anyone working to eliminate it is working on behalf of the aristocracy. Don’t let them tell you otherwise.
DISCLAIMER: True tax advice is a two-way conversation, and your accountant needs to hear your full situation to apply the rules correctly in your case. This post is meant for general information only. Please don’t act on this alone.
Bio: Hannah Cole is an artist and Enrolled Agent. She is the founder of Sunlight Tax.
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