It’s Time to Restore the Estate Tax
Ben Veghte, Director of Policy and Research, Social Security Works
The estate tax — a tax on property (cash, real estate, stock, or other assets) transferred from deceased persons to their heirs — is an essential component of tax policy in any meritocratic democracy. In an era of rising income and wealth inequality, a strong estate tax has become all the more critical. Yet Congress has allowed the estate tax to erode, particularly over the last 15 years. And instead of debate in Congress revolving around how to restore it, there is a movement to repeal it altogether.
A strong estate tax is in the DNA of American political culture
The estate tax is a quintessentially American component of tax policy. Most of the founding fathers, including Thomas Jefferson and Thomas Paine, viewed inherited wealth as an aristocratic impediment to democracy. Many other leading figures in American history, such as Andrew Carnegie, Theodore Roosevelt and Herbert Hoover, and as well as contemporary public figures ranging from Jimmy Carter to Warren Buffett, have all supported a more robust estate tax as a means of reducing intergenerational inequality and enhancing social mobility.
From the late 1930s through the 1970s, the top federal estate tax rate in the United States was always 70 percent or above. In 1980, the rate was 70 percent, and the tax exempted an estate’s first $161,563 of assets. By 2000, the estate tax had been substantially weakened: far more assets were exempted ($675,000, or just under $1 million in today’s dollars), with a top marginal rate of 55 percent.