“We have virtually ended the estate tax, or death tax that is — as it is called, for small businesses, ranches and family farms,” Trump said before the nation on Tuesday.
An estate tax is levied on assets – like real estate and cash – when a person dies.
Republicans raised the estate tax exemption under the Tax Cuts and Jobs Act to $11.18 million, meaning assets valued up to that amount can be transferred without triggering the 40 percent tax. In 2017, the exemption was $5.49 million per individual.
The change is expected to reduce federal revenue generated by the tax by $83 billion through 2027, according to estimates provided by the Joint Committee on Taxation (JCT).
As a result of the change to the tax provision, the JCT estimated that the number of taxable estates would drop to 1,800, from 5,000 under the previous law.
Members of the GOP, including President Trump, have advocated the elimination of the estate tax altogether.
Meanwhile, as more Democrats are peddling wage hikes to combat wealth disparities in the country in the run-up to the 2020 election, Independent Vermont Sen. Bernie Sanders recently proposed an expansion of the estate tax – with rates as high as 77 percent.
Under his plan, the first $3.5 million worth of assets would be exempted, after which a 45 percent rate would be triggered. For those with assets worth between $10 million and $50 million the rate would rise to 50 percent – and to 55 percent for an estate valued between $50 million and $1 billion. The rate would hit 77 percent for people with an estate worth more than $1 billion.
Sanders said his bill, dubbed the “For the 99.8% Act,” would only affect to the richest 0.2 percent of Americans.
Sanders isn’t the only progressive Democrat seeking to raise federal revenues through a tax hike on the country’s wealthiest residents. Massachusetts Democratic Sen. Elizabeth Warren recently proposed a wealth tax that would be equal to 2 percent on those with more than $50 million in assets, and 3 percent on those with more than $1 billion in assets.
Some progressives are focusing their efforts on income inequality rather than wealth inequality. Freshman New York Democrat Alexandria Ocasio-Cortez proposed raising taxes on incomes above $10 million to 70 percent – the proceeds of which would be used to help fund a new green energy plan.