SOUTH BURLINGTON, Vt., Sept. 6 -- With the wealth gap in the United States growing and greater already than in any other major country, U.S. Sen. Bernie Sanders today called for a progressive estate tax on multi-millionaires and billionaires.
"A nation will not survive morally or economically when so few have so much while so many have so little. We need a tax system which asks the billionaire class to pay its fair share of taxes and which reduces the obscene degree of wealth inequality in America," Sanders said in a speech here this morning at the Vermont AFL-CIO annual convention.
The growing wealth gap in the U.S. is worse now than at any time since 1928, the year before the Great Depression began. The top 1 percent of Americans own more wealth than the bottom 90 percent. The richest 400 Americans have amassed more than $2 trillion in wealth, a sum greater than all of the assets of the bottom 150 million Americans combined. One family, the Waltons of Wal-Mart fame, owns more wealth than the bottom 40 percent of Americans.
While the rich are becoming richer, more Americans live in poverty today than at any time in our nation's history. Half of all Americans have less than $10,000 in savings. We have the highest rate of childhood poverty -- 22 percent -- than any other major country.
Sanders said the fairest way to reduce wealth inequality, lower the $17 trillion national debt and pay for investments in infrastructure, education and other neglected national priorities would be to enact a progressive estate tax on the wealthiest Americans, the top 0.25 percent.
Under his proposal, 99.75 percent of Americans would not pay a penny more in estate taxes. For those who would pay more, the tax rate on estates valued from $3.5 million to $10 million would be 40 percent. There would be a 50 percent tax on estates worth $10 million to $50 million and a 55 percent levy on estates worth more than $50 million. A 10 percent surtax would be applied on estates worth more than $1 billion, a category that today includes fewer than 500 American families. The bill also would close estate tax loopholes that have allowed the wealthy to avoid an estimated $100 billion since 2000. On all estates, the first $3.5 million for individuals and $7 million for couples would be exempt from federal taxes.
Sanders' proposal won praise from leading economists.
America "is creating an aristocracy of wealth populated by heirs who don't have to work for a living yet have great influence over how the nation's productive assets are deployed," according to Robert B. Reich, a former U.S. Department of Labor secretary who is now a University of California at Berkely professor. Reich called Sanders' estate tax bill "a welcome step toward reversing this trend."
Thomas Piketty, the top-selling author and Paris School of Economics professor, said the United States pioneered progressive estate and income taxes but today is on the verge of becoming even more unequal than pre-World War I Europe. "To avoid this, one needs stronger investment in skills and education, better paying jobs and a more progressive tax system. Sen. Sanders' estate tax bill is an important step in this direction."