What You Need to Know
- The For the 99.5% Act reduces the estate tax exemption to $3.5 million per individual and $7 million per couple
- The bill adds higher tax brackets for larger estates.
- Sanders also introduced Thursday a bill to raise the corporate tax to 35% and reduce offshoring of profits.
Sen. Bernie Sanders, I-Vt., released Thursday the For the 99.5% Act, legislation that would restore the estate tax exemptions to the 2009 thresholds of $3.5 million per individual and $7 million per married couple from the current exemptions of $11.7 million and $23.4 million.
In a shift, larger estates would be subject to higher tax rates. The current 40% tax rate would be raised to 45%. Taxable estates greater than $10 million would be taxed at 50%, amounts greater than $50 million at 55%, and amounts greater than $1 billion would be taxed at 65%, according to the Joint Committee on Taxation.
The same rates would apply for gift taxes, for which the threshold would be lowered to $1 million.
“Introduction of this legislation is a big step forward to significantly strengthening the estate tax,” Frank Clemente, executive director of Americans for Tax Fairness, said Thursday in a statement.
During a Senate Budget Committee hearing Thursday, titled “Ending a Rigged Tax Code: The Need to Make the Wealthiest People and Largest Corporations Pay Their Fair Share of Taxes,” Sanders said that his bill would “demand that the families of the millionaire class not only not get a tax break but start paying their fair share of taxes.”
Sanders said that he’d also be introducing Thursday the Corporate Offshore Tax Dodging Prevention Act, “legislation that would prevent corporations from shifting their profits offshore to avoid paying U.S. taxes and would restore the top corporate rate to 35%, where it was before [Donald] Trump became president.”
Sens. John Thune, R-S.D., and John Kennedy, R-La., introduced legislation in early March to repeal the estate tax.
Clemente noted that the tax plan released by President Joe Biden during his campaign “also tracked the 2009 estate tax levels that are the base” of Sanders’ bill, but due to the higher tax brackets for larger estates, his group expects the measure to raise about twice as much revenue as the Biden plan.
Andy Friedman, founder and principal of The Washington Update, and a former tax attorney, told ThinkAdvisor Thursday in and email that Biden’s plan “would retain the 40% estate tax rate currently in place. The Sanders bill would increase the rate significantly, topping out at a 65% rate on estates over $1 billion.”