The richest families in the U.S. are set to dodge trillions of dollars’ worth of taxes in the coming decades thanks to tax loopholes, according to a new report.
If the current maximum estate tax rate is kept at 40 percent, the wealthiest families will avoid taxes of approximately $8.4 trillion over the next 24 year. Americans for Tax Fairness found in its report. In the meantime, the wealthiest 0.5 percent will leave $21 trillion to their heirs between now and 2045.
According to the report, $8.4 Trillion in dynastic wealth could be used to allow the government implement the Build Back better Act for the next 40 decades. The House-passed version was slated to cost $1.75 Trillion over a decade.
Tax loopholes allow families and individuals to avoid the estate tax as well as gift taxes and wealth transfer taxes. Although Donald Trump and congressional Republicans doubled the estate tax exemption during the first year of Trump’s presidency, Democratic lawmakers didn’t address estate and generational tax loopholes in the tax reform section of the Build Back Better Act.
Trump-implemented rule, which is tied to inflation, affects estate values of up to $12 millionTax-free passing of assets up to $24,000,000 for married couples and individuals is possible. This is a significant amount that only 0.1% of estates owe estate tax.
According to the report, wealth-transfer tax avoidance “has played an outsized role in our return to Gilded Age levels of wealth concentration.” Failing to impose estate taxes, gift taxes and generation-skipping tax exemptions is threatening not only the U.S. economy, but also the “stability of American democracy,” the report says.
“No justification exists for the failure of policy makers to end this scandal,” it continues. “There is no constituency supporting these enormous tax loopholes except the ultrarich and the They work in wealth-protection businesses. They serve no societal purpose.”
The report’s authors go on to suggest levying a tax on undistributed trust income in order to disincentivize the accumulation of wealth within the trust. They also recommend implementing a 2 percent wealth tax on trust holdings that exceed $50 million and a 3 percent tax on holdings over $1 billion – the same wealth tax proposed by Sen. Elizabeth Warren (D-Massachusetts).
Part of the reason why lawmakers have yet to address issues of accumulating dynastic wealth is the outsized power that the wealthy have on politics, the report’s authors point out.
Despite campaigning on estate and gift tax reforms, President Joe Biden didn’t include any such measures in his Build Back Better proposal, even though Other things were added by himTaxes on the wealthy
“His proposal to eliminate stepped-up basis – an income-tax policy that allows the wealthy, including billionaires, to entirely escape income tax on a lifetime of investment gains – was abandoned after wealthy opponents went on the attack, using phony claims that the proposal threatened America’s family farms and small businesses,” the report says.
The report prompted lawmakers to reintroduce calls to tax rich people. “We can afford Build Back Better – four times over, as a matter of fact,” wrote Rep. Bonnie Watson (D-New Jersey). “For the lawmakers who opposed the bill, affordability was never *really* the issue. They believed that protecting special interests was worth the risk of hurting working families. The rich must pay their fair share.”
