Interestingly enough, this plan is nearly identical to the one proposed by her former Democratic rival Bernie Sanders (perhaps Clinton is looking to reel in some of his supporters).
Since her campaign began, Democratic presidential candidate Hillary Clinton has pledged to raise taxes on the wealthy to help fund many of her policy proposals. As the Committee for a Responsible Budget notes in a new report out on Thursday, the Democratic nominee has radically revamped her plan to raise the estate tax-and in the process, effectively declared war on the Rich Kids of Instagram.
That would boost the expected revenue from Clinton’s tax increases to $1.5 trillion in the next 10 years.
The former Secretary of State now advocates an estate tax of 65 percent, and said she would lower the cutoff for the estate tax to those estates worth more than $3.5 million-a tax structure first put forth by Sen. “The point is this is about politics and horse-trading, and we’ll see if it becomes a tradeoff between her higher estate-tax rates and keeping the step-up”. Currently, the estate tax only applies to the wealthiest 0.2 percent.
This ensures that the most affluent inheritors pay the most, and giving each beneficiary a lifetime exclusion of $1 million to $2 million would encourage estates to distribute to more people, breaking themselves up into smaller pieces and more effectively combating entrenched dynamic wealth than the current tax.
Another tax increase supported by Hillary Clinton is the so-called “Buffett Rule”, named for investor Warren Buffett, that requires a 30 percent minimum tax rate for extremely high-income households. “Among the tax advantages of such trusts is that any appreciation in the house’s value can happen outside their taxable estate”.
Clinton took the rate from primary rival Vermont senator Bernie Sanders. Clinton’s newly released tax returns show she still uses tax avoidance strategies to shield her Death Tax liability. The argument also has been made that the estate tax was good for its time, when a small group of plutocrats controlled huge sections of the American economy, but that now, in the go-go 21 Century, it is something of an anachronism.
“The people who care a lot about it are the ones who are subject to it or the ones who benefit from it”, said Michael Graetz, a tax-law professor at Columbia University and co-author of a book on the politics of the estate tax.
Clinton’s plan would make the tax code even more progressive than it is today.
Clinton wants so-called carried interest to be taxed as ordinary income. Then, their heirs only have to pay taxes when they sell the assets and only have to pay capital-gains taxes on the difference between the sale price and the value when they were inherited.
Under Mrs. Clinton’s plan and under a proposal from President Barack Obama that has gone nowhere in Congress, a bequest of an asset would be treated as realizing those pent-up gains. (All the thresholds would double for a married couple.) That would bring the highest rate back to where it was in 1982.