Under siege and weary from their crushing financial burden, the nation's ultra-rich are finally getting the tax relief they so desperately need. We wish we could feel not only their pain but also the immense relief that must come from knowing that millions of dollars in estate taxes will now remain in their already ample pockets.
Estate taxes are collected by the government from heirs when they come into possession of enormous sums of money they did nothing to earn but obtained merely by being lucky, having been the benefactor of a rich person's will. In the twisted logic of our nation's tax system under a billionaire president, the government has vastly restricted its own rights to collect taxes from the windfall profits of death.
Around 100,000 Americans filed estate tax returns in 2002, according to The Washington Post. But now only 5,000 are expected to fall under the requirements of the new estate tax code, whose provisions were buried in last year's GOP tax-cut law. While the entire Republican tax bill was a cruel snub of the lower and middle classes, the estate tax cuts were a particularly heartless elevation of the rich.
Before the cuts, the estate tax didn't kick in until inheritances reached an $11 million threshold for couples, when a 40 percent tax rate kicked in. The tax cuts doubled that threshold to $22 million, leaving the 40 percent rate intact.
For most Americans, inheritances amount to the relatively meager amount left behind after medical bills and funeral expenses are covered following a loved one's death. For the ultra-rich, the take is more like winning the lottery. It's hard to feel sympathy for the taxes incurred after inheriting, say, a yacht, a private plane and a vast stock portfolio.
Wealth inequality is a truly enormous problem in the United States. Bill Gates, Jeff Bezos and Warren Buffett together have more wealth than the entire bottom half of the American population. A cash-strapped federal government finds itself contemplating aid cuts to the poor just so it can pay for tax cuts benefiting the wealthy.
Republicans deride the "death tax" as a form of double taxation because it involves collecting money that had already been subjected to income taxation. But the estate tax is levied on heirs, not the deceased who actually earned the wealth.
Reasonable people may disagree on the right amount to tax on bequests above $20 million. Perhaps a better policy would be to set the threshold much lower, around $1 million or $2 million, and establish a graduated rate to ensure that the government gets a fair share while the wealthy still enjoy a reasonable windfall. What's eminently clear, however, is that a policy that taxes fewer than 2,000 estates in a year is in desperate need of a change.
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