Some financial planning specialists have warned colleagues that the recent dramatic decrease in the impact of the federal estate tax could be temporary.
Sen. Elizabeth Warren gave those warnings new life Saturday, in Des Moines, Iowa, by mentioning the estate tax at her first presidential campaign organizing event.
Warren, a Democrat from Massachusetts, launched a 2020 presidential exploratory committee Dec. 31. She traveled to Iowa to talk to potential supporters. She told the people in the audience that she would fight to increase economic equality and attack corruption.
She mentioned health care costs and access to health care several times, according to a video of her speech posted by C-SPAN.
“We have to stay focused on what matters to us,” Warren said. “What matters to us is that people get access to health care that they can afford, and it’s real, and it’s there in rural hospitals and in communities all across this country.”
The estate tax topic came up when Warren was talking about her response to the rising cost of housing. She said the government should build 3.2 million new housing units.
“How do you pay for something like that?” Warren asked. “I’ve got an answer. The answer is if we just go back to the estate tax, and tax the families that were taxed upon death during the George W. Bush administration.”
George W. Bush served as president from 2001 through 2009.
Returning to the estate tax rules in effect during the George W. Bush administration would raise enough money to pay for 3.2 million new housing units, Warren said.
Warren said the main obstacle to returning to the Bush-era estate tax rules is the influence of 10,000 rich families.
Warren said that “people in Washington” tell her, when she describes her proposal for returning to the old estate tax rules, ”You can never do that, because 10,000 rich families have so much more power in Washington than millions of American families who are struggling.”
“What I say to them,” Warren said, “is, ‘You just wait till 2020.’”
Warren’s campaign kickoff speech could be a sign that proposals for increasing the estate tax could get some attention from Democrats during the 2020 presidential and congressional campaign cycle.
Another possible presidential contender, Sen. Bernie Sanders of Vermont, has proposed increasing the top estate tax rate to 65%.
Estate Tax History
When George W. Bush entered the White House, the estate tax exclusion amount was $675,000 for an individual, and the maximum estate tax rate 55%.
The Economic Growth and Tax Reconciliation Relief Act of 2001 (EGTRRA) phased in a reduction of the scope of the federal estate tax.
By 2009, the exclusion amount had increased to $3.5 million for an individual. The top tax rate was 45%.
The Tax Cuts and Jobs Acts of 2017 further narrowed the scope of the federal estate tax.
For 2019, the exclusion amount is $11.4 million for an individual. The top tax rate is 40%.
A C-SPAN video of Warren’s speech in Des Moines is available here.
— Read Sen. Warren Warns of Fintech Privacy Risks, on ThinkAdvisor.