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International 10/17

American workers need a pay raise – the estate tax could help

The American Dream rests on the assumption that we live in a meritocracy, where a combination of skill and hard work, rather than inherited class and privilege, is the road to a better standard of living. The estate tax is one of the few provisions of the tax code that attempts to eliminate that unearned wealth—but if the House GOP has its way, the estate tax will be no more by 2024. The Tax Cuts and Jobs Act would first double the exemption—to $11 million—before eliminating the tax entirely in six years.

If enacted, the proposal would further diminish the tax’s ability to promote intergenerational mobility, which has eroded very badly over time. By now, only a tiny group of extremely large estates are subject to any tax at all.

There are several reasons to consider the opposite of the GOP approach, instead returning the tax to earlier levels. We could use the funds to provide working-class America a pay raise that could help restore their share of income to 1970s levels. That would relink rewards to work rather than inheritance and put a big dent in inequality.

WHO PAYS THE ESTATE TAX? ALMOST NO ONE.

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