No more tax breaks for billionaires
One: The United States is in the midst of the worst economic downturn since the 1930s. More than 16 percent of working-age Americans are unemployed or underemployed. Long-term unemployment is the highest on record. Millions of people have lost their homes, their savings and their pensions.
Two: The United States today has a $13 trillion national debt and a record-breaking deficit. Last year alone, the federal government spent more than $186 billion just paying interest on that debt. We are leaving our children and grandchildren a huge financial obligation which will not only impact them personally but affect the well-being of the entire country as we compete in the global economy.
Three: The United States has the most unequal distribution of wealth and income of any major country. Today, the top 1 percent earns more income than the bottom 50 percent and the top 1 percent owns more wealth than the bottom 90 percent. During the Bush years, when the middle class saw a $2,200 decline in median family income, the 400 wealthiest families saw their income more than double while their effective income tax rates were slashed almost in half over the past 15 years. The wealthiest 400 Americans have now accumulated $1.27 trillion in wealth, while the highest paid 400 Americans had an average income of $345 million in 2007 alone. As a result of Bush tax policy they pay an effective tax rate of 16.6 percent, the lowest on record. (Warren Buffet, one of the richest people on earth, has often commented that he pays a lower effective tax rate than his secretary).
Four: Last March, Dan Duncan, the wealthiest person in Houston, Texas, died and left his family some $9 billion dollars. For the first time since 1916, Mr. Duncan's heirs will pay no inheritance taxes. Not one dime. This occurred as a result of President Bush's $1.35 trillion dollar tax break enacted into law in 2001.
In other words, at a time when this country has a devastatingly high rate of unemployment, a huge debt, massive unmet needs and a growing gap between the very richest people and everyone else, we are currently providing enormous tax breaks to millionaire and billionaire families. This is absurd.
Under the Bush tax law, inheritance taxes eliminated this year would be restored to the pre-2001 estate tax rates in 2011 unless Congress acts. Needless to say, a united Republican Party and a few Democrats, representing the interests of the very wealthy few, are working hard to either eliminate the inheritance tax forever or make it as low as possible. (In fact, in 2006, every Republican but two voted in favor of eliminating the estate tax completely).
A century ago, President Teddy Roosevelt, a good Republican, called for a graduated inheritance tax on wealthy estates. In 1916, Congress passed that law. Here is what Roosevelt said in 1910.
"The absence of effective state, and, especially, national, restraint upon unfair money-getting has tended to create a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power. The prime need is to change the conditions which enable these men to accumulate power which is not for the general welfare that they should hold or exercise No man should receive a dollar unless that dollar has been fairly earned. Every dollar received should represent a dollar's worth of service rendered -- not gambling in stocks, but service rendered. The really big fortune, the swollen fortune, by the mere fact of its size acquires qualities which differentiate it in kind as well as in degree from what is passed by men of relatively small means. Therefore, I believe in a graduated income tax on big fortunes, and in another tax which is far more easily collected and far more effective -- a graduated inheritance tax on big fortunes, properly safeguarded against evasion and increasing rapidly in amount with the size of the estate."
I agree with Teddy Roosevelt. What he proposed is exactly what The Responsible Estate Tax Act that I have introduced (along with Senators Harkin, Whitehouse, Franken and Sherrod Brown) will do. Specifically, my bill exempts the first $3.5 million of an inheritance from paying any federal estate tax whatsoever. Doing this means that 99.7 percent of Americans who receive an inheritance would not pay one penny in federal estate taxes. This legislation would impact only the very wealthy -- the top three-tenths of 1 percent.
Under my bill, the value of estates above $3.5 million and below $10 million would be taxed at 45 percent; the value of estates above $10 million and below $50 million would be taxed at 50 percent; and the value of estates above $50 million would be taxed at a rate of 55 percent, the same as the 2001 level before the Bush tax cuts. Further, my bill includes a 10 percent surtax on the value of estates above $500 million ($1 billion for couples). According to the Joint Committee on Taxation, this legislation, over a 10-year period, would bring in over $315 billion -- a good step forward in addressing our national debt.
This legislation would do something even more important. In the midst of these enormously difficult times, it makes clear that we are one country and that all Americans must accept shared responsibility. It is immoral and unfair that, while the middle class struggles to survive, millionaires and billionaires get tax breaks.
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