I'm a millionaire. I don't need another tax break, Mr. Trump
At a time of staggering inequality, I can’t believe that Congress and the Trump administration want to give me another tax break.
On Wednesday, the Republican party unveiled their tax reform plan, which included the elimination of the federal estate tax. But as one of a small segment of people in the top 1% with enough wealth to someday pay the estate tax, I believe a tax on inherited wealth is completely reasonable and fair.
I grew up in Alabama, one of the poorest states in the country, in a wealthy family. We benefited from financial deregulation during the Reagan years, as well as prudent taxpayer-funded investments that ensured stability, prosperity and economic growth.
After living through decades of increasing economic division and racial inequality, I believe today’s wealth gap is poisoning our body politic.
After the second world war, between 1945 and 1975, we taxed wealthy people and invested in infrastructure, education, and middle-class opportunity. Veterans Administration mortgages, the GI bill, and other debt-free college opportunities put millions of families, albeit mostly white, on the road to economic prosperity. Median income rose commensurately for all working people, secretaries and sanitation workers as well as CEOs.
In recent decades, we have cut taxes on wealthy folks and failed to make adequate public investments to ensure broadly shared prosperity. This has led to problems such as the deteriorating state of our public infrastructure and declining social mobility.
What good will come from a generation of college students saddled with average student debt of $37,000? How can companies and their employees thrive when average CEO salaries are over 300 times those of their employees?
We can reverse inequality by making public investments in education and infrastructure that create good jobs. But a key ingredient is a progressive tax system, including the estate tax.
Maintaining an estate tax is one of the few ways we can raise revenue without hurting low and middle-income families. The estate tax is paid only by couples with over $11m and individuals with wealth over $5.45m at the time of their deaths. This is fewer than one out of 500 households, exempting small businesses and family farms.
My desire to retain the estate tax is not born out of charity or generosity. These levels of inequality undermine everything we care about. The Center for Economic Policy Research predicts that, even without abolishing the estate tax, the wealthiest 1% of Americans will claim half of all private US wealth in the next 20 years. Meanwhile, the assets of ordinary Americans are stagnant or eroding. Home ownership rates, a traditional measure of middle-class wellbeing, have been steadily declining since 2005.
The wealthiest 400 US billionaires today have as much wealth as the bottom 62% of US households combined. The wealthiest 20 US individuals alone – a group small enough to fit on a Gulfstream 650 luxury jet – have as much wealth as the bottom half of US households.
Instead of abolishing the estate tax we should strengthen it. A century ago, when the estate tax was first instituted to put a brake on concentrated wealth, President Theodore Roosevelt favored a federal estate tax that he described as “a graduated inheritance tax on big fortunes” that should be “properly safeguarded against evasion” and must increase “rapidly in amount with the size of the estate.” Estate taxes, he argued, were necessary “to preserve a measurable equality of opportunity” in the broader society.
Some people will argue that an estate tax punishes successful people. But a tax targeted solely to multimillionaires and billionaires recognizes that none of us achieves this level of financial success alone. Commonwealth of public investments in research, knowledge, infrastructure, education, and property rights protections provided the foundation that made our wealth possible. Further, the estate tax doesn’t affect those who’ve been successful. Rather it limits the rewards received by their heirs.
We are all in this together. There is no wall high enough or gate thick enough to buffer us from the downside of growing inequality. It is against my interest to have our society drift further apart. It is in my personal and selfish interest to have every young person have access to early childhood education, affordable college, and good jobs.
Those of us who will pay an estate tax have already enjoyed the enormous benefits of wealth. Do you, US taxpayers, really want to give us another break?
Amelie Ratliff is a member of the Patriotic Millionaires She is a former minister, educator, soccer coach, and consultant; and is now a community volunteer and philanthropist. She grew up in Birmingham, Alabama and currently lives in Boston.