Bottom 90% has just 23%
Greatest concentration of wealth at the top than any time since Gilded Age of the 1890s
In America's Gilded Age (1878-1889), child labor and slavery were acceptable methods of exploiting cheap labor to get rich. There were precious few regulations and laws to protect anyone.
News & Opinion by Robert Reich
(BERKELEY, CA.) -- At a time of historic economic inequality, it should be a no-brainer to raise a tax on inherited wealth for the very rich. Yet there’s a move among some members of Congress to abolish it altogether.
If you’re as horrified at the prospect of abolishing the estate tax as I am, I hope you’ll watch and share the video below.
Today the estate tax reaches only the richest two-tenths of one percent, and applies only to dollars in excess of $10.86 million for married couples or $5.43 million for individuals.
That means if a couple leaves to their heirs $10,860,001, they now pay the estate tax on $1. The current estate tax rate is 40%, so that would be 40 cents.
Yet according to these members of Congress, that’s still too much.
THE RICH WOULD GET RICHER, YOU'D END UP PAYING FOR LOST TAX REVENUE
Abolishing the estate tax would give each of the wealthiest two-tenths of 1 percent of American households an average tax cut of $3 million, and the 318 largest estates would get an average tax cut of $20 million.
It would also reduce tax revenues by $269 billion over ten years. The result would be either larger federal deficits or higher taxes on the rest of us to fill the gap.
This is nuts. The richest 1 percent of Americans now have 42 percent of the nation’s entire wealth, while the bottom 90 percent has just 23 percent.
That’s the greatest concentration of wealth at the top than at any time since the Gilded Age of the 1890s.
Instead of eliminating the tax on inherited wealth, we should increase it – back to the level it was in the late 1990s.
The economy did wonderfully well in the late 1990s, by the way.
Adjusted for inflation, the estate tax restored to its level in 1998 would begin to touch estates valued at $1,748,000 per couple.
That would yield approximately $448 billion over the next ten years – way more than enough to finance ten years of universal preschool and two free years of community college for all eligible students.
Our democracy’s Founding Fathers did not want a privileged aristocracy. Yet that’s the direction we’re going in.
The tax on inherited wealth is one of the major bulwarks against it. That tax should be increased and strengthened.
It’s time to rein in America’s surging inequality. It’s time to raise the estate tax.
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ROBERT B. REICH, Chancellor’s Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies, was Secretary of Labor in the Clinton administration.
Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century. He has written thirteen books, including the best sellers “Aftershock" and “The Work of Nations." His latest, "Beyond Outrage," is now out in paperback.
He is also a founding editor of the American Prospect magazine and chairman of Common Cause. His new film, "Inequality for All," is now available on Netflix, iTunes, DVD, and On Demand. This piece was originally published at robertreich.org and is republished here with permission.
