SUBSCRIBE TO OUR FREE NEWSLETTER
Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
5
#000000
#FFFFFF
5
#000000
#FFFFFF
estate tax
Dynastic Wealth of Ultra-Rich American Families Wins Again With GOP Tax Bill
The Republican's policy will continue a decades-long effort to weaken a critical tool to prevent the hoarding of wealth from one generation to the next.
May 18, 2025
The sprawling tax and spending bill before the House of Representatives would cut more than $200 billion from food assistance, potentially affecting 4 million children and 7 million adults, while providing an estate tax cut costing roughly the same amount to a few thousand people who will leave behind more than $7 million to their heirs.
The bill would increase the estate tax exemption to $15 million for single people and $30 million for couples in 2026 and allow it to rise with inflation moving forward. In other words, a couple could leave $29.99 million to their heirs in 2026 without paying a cent of estate tax.
This would continue a decades-long effort to weaken a critical tool to prevent the hoarding of wealth from one generation to the next.
Less than a generation ago, the estate tax was much more robust, with an individual exemption of $675,000 in 2001. Adjusted for inflation, that would amount to an exemption of $1.2 million per individual today. Even so, the tax was paid by just a tiny fraction of Americans; just 2.14 percent of all estates were subject to the tax in 2001.
But since then, lawmakers have weakened the estate tax four times, most significantly via the 2017 Trump tax law. That law doubled the estate tax exemption, bringing it to about $14 million today ($28 million for couples). This would revert to roughly $7 million if the Trump tax provisions expire at the end of this year as scheduled.
As we explained in a 2023 report, these cuts have taken the tax to historic lows. The most recent data from the IRS, from 2019, show that just 0.08 percent of all deaths resulted in estate tax liability that year, when the estate tax had an exemption of $11.4 million per person.
People across the country, including many Republicans, are expressing concern about the breadth and depth of proposed cuts to food assistance, health care, and other public services that are part of the reconciliation package the House is currently moving forward. At the same time, overwhelming majorities of Americans think that wealth inequality is a problem that leaders need to solve.
Given this, the least that lawmakers can do is allow the estate tax to drop slightly back down in 2026 instead of cutting it for the wealthiest families yet again.
Keep ReadingShow Less
'Reverse Robin Hood of the Highest Order': GOP Advances Massive Tax Cuts for the Rich
"The unavoidable truth is that Republicans' core priority with this legislation was to benefit the wealthy at the expense of everyone else, and that is exactly what their bill does," said Democratic Rep. Don Beyer.
May 14, 2025
House Republicans on Wednesday advanced legislation that would deliver a slew of tax breaks to the wealthiest Americans and large corporations, giveaways that the party aims to fund with unprecedented cuts to Medicaid and federal nutrition assistance.
Throughout the marathon markup hearing that began Tuesday afternoon and ended with Wednesday morning's party-line vote, Democratic members of the House Ways and Means Committee offered amendments aimed at closing the carried-interest loophole, preventing a major tax break for rich heirs, blocking any handouts to centimillionaires, and reverting the top marginal tax rate to its pre-2017 level of 39.6%.
Republicans—many of whom stand to reap significant personal benefits from another round of tax cuts—rejected the Democratic amendments.
"At every turn, Republicans voted down amendments designed to prevent the majority of benefits of their tax bill from flowing to rich people," Rep. Don Beyer (D-Va.), a member of the committee, said following Wednesday's vote. "The unavoidable truth is that Republicans' core priority with this legislation was to benefit the wealthy at the expense of everyone else, and that is exactly what their bill does."
Shortly after the hearing kicked off on Tuesday, the nonpartisan Joint Committee on Taxation released a distributional analysis showing that the Republican tax bill—part of the GOP's sprawling reconciliation package—would disproportionately benefit the wealthiest Americans while doing little for low- to middle-income families.
Beyer noted on social media that "a dirty little secret" of the Republican tax legislation is that it would actually raise taxes on the bottom 20% of Americans in 2029—the year President Donald Trump leaves office.
The bill is even more regressive when you look at 2029 when tax cuts for families expire & tax increases resulting from cuts to ACA premium tax credits grow larger. pic.twitter.com/3BDz1bFina
— Brendan Duke (@Brendan_Duke) May 14, 2025
The House Ways and Means Committee vote came as Republicans on the Energy and Commerce and Agriculture Committees simultaneously worked to advance their respective sections of the GOP reconciliation package, the centerpiece of Trump's legislative agenda.
The bills before the latter two committees would enact combined cuts of around a trillion dollars to Medicaid and the Supplemental Nutrition Assistance Program over the next decade, stripping critical benefits from millions of people across the country.
Kobie Christian, a spokesperson for the Unrig Our Economy coalition, said Wednesday that the GOP reconciliation package is "a reverse Robin Hood of the highest order."
"From cutting healthcare to ripping away food assistance to rubberstamping cost-raising tariffs, Republicans in Washington are making life more expensive for working- and middle-class Americans by handing over their tax dollars to the super-rich," said Christian. "Families need lower costs, not cuts to healthcare and billionaire tax breaks. Congress should be fighting to help working families, not the ultra-wealthy."
Keep ReadingShow Less
The Rich Want You to Think They Pay A Lot in Taxes—But It's a Lie
Please ignore the tales of horror that apologists for the ultra-rich concoct to advocate against any meaningful tax increases on their deep-pocketed friends.
Apr 21, 2025
What is the mission of the Washington, D.C.-based Tax Foundation? Even a quick review of the Tax Foundation’s output makes it perfectly plain: to help make average Americans see the richest among us as terribly overtaxed.
Hardly a Tax Foundation report goes by without one iteration or another of this overtaxed claim. Just last fall, the Tax Foundation produced a study that had billionaire Warren Buffett paying taxes at a rate of over 1,000 percent.
A few years back, early in the Biden years, I deconstructed another Tax Foundation claim, that the passage of tax changes the Biden White House was then pushing would leave the estate of a hypothetical taxpayer worth $100 million facing a tax rate of 61.1 percent. My response detailed the absurdity of that claim.
But what if that 61.1 percent had turned out to be an appropriate calculation? Would that 61.1 percent rate have really amounted to an oppressive tax levy? The Tax Foundation sure wants people to think so.
So let’s take a closer look at the Tax Foundation’s mythical ultra-rich taxpayer and let’s tweak the Tax Foundation’s hypothetical facts to make them just realistic enough to work with.
Suppose we assume our mythical taxpayer originally paid $1 million for the asset that ended up worth $100 million at her death 25 years later. That would leave $99 million of taxable gain. And a $1 million asset appreciating to $100 million after 25 years would have an average annual rate of return of 20.23 percent, a realistic rate for the sort of “home run investments” the ultra-rich actually make.
Let’s also ignore the exemption from federal estate tax — currently $14 million per individual, $28 million for a married couple — and treat the entire amount remaining from the $100 million after payment of income tax as subject to a 40 percent estate tax.
Applying the Tax Foundation’s methodology from that point, we would end up with a total effective tax rate just shy of 65.8 percent, nearly five percentage points higher than the 61.1 percent rate that had our friends at the Tax Foundation clutching their pearls. Wow! Sounds stunningly oppressive, huh?
Actually, no. The reason: The Tax Foundation’s presentation deceptively ignores the tax reduction magic of buy-hold for decades-sell, the tax loophole that causes the effective annual tax rate on the growth in the value of investments to decline as the rate of return and length of the holding period increase.
Our mythical taxpayer would be the quintessential beneficiary of this tax reduction magic. She would see her investment gains compound for 25 years without paying a nickel in income tax, all while her asset’s value was increasing by 20.23 percent per year.
The Tax Foundation, you see, makes quite the fuss over the one-time tax a mythical taxpayer’s estate would pay in the year of her death, but conveniently forgets about the taxpayer’s zero tax rate for the previous 25 years running.
That focus on a once-in-25-years tax payment ignores the full picture. To see that more clearly, consider the impact that a 65.8 percent tax would have on a mythical taxpayer’s overall investment return. At an after-tax annual rate of return of 15.18 percent, an asset with an initial value of $1 million will be worth $34.2 million in 25 years, exactly the amount left of the mythical taxpayer’s $100 million after her estate’s one-time tax payment of $65.8 million. That would be a 25 percent reduction in the pre-tax annual rate of return of 20.23 percent.
In other words, that supposedly onerous 65.8 percent tax at the time of the Tax Foundation’s mythical taxpayer’s death translates to an effective annual tax rate of just 25 percent.
Had the Tax Foundation’s mythical taxpayer been required to pay federal tax, covering both current income tax and future estate tax, at an annual rate of 25 percent on the growth in her investment’s value, and had she sold off just enough of the investment each year to pay the tax, her estate would be left with the same amount in the year of her death as it would have after paying the supposedly oppressive income and estate tax due under the terms of the Biden budget.
So, to review, the Tax Foundation concocted a hypothetical situation to show the proposals in Biden’s budget rated as extreme and oppressive. But even though that hypothetical is so concocted it couldn’t be found in the real-life situations of even the richest Americans, the supposedly oppressive one-time tax rate paid by the Tax Foundation’s mythical taxpayer translates to a modest effective annual tax rate of just 25 percent.
The bottom line: Once we take into account the impact of buy-hold for decades-sell, the tales of horror that apologists for the ultra-rich concoct to advocate against any meaningful tax increases on their deep-pocketed friends turn out to be not at all horrible.
Unless you’re horrified at the prospect of a reformed tax system that prevents the already obscene concentration of American wealth from becoming even worse.
Keep ReadingShow Less
Most Popular