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Increasing wealth inequality, the ill-begotten tax plan, and some potentially good news!

Summary:
Over at WaPo, including this section on the need to, as no less than Warren Buffett puts it, stop coddling the super-rich! “Stop coddling the super-rich!” That was the name of a Warren Buffett op-ed from a few years ago, and while I know this is a heavier lift for Rs — “coddling the rich” is analogous to assuaging the donors — it makes no sense to waste revenue loss on the one group that’s consistently been crushing it for decades. New data from the Federal Reserve reveals that over the past few decades, the share of wealth going to the bottom 90 percent is down about 10 percentage points while that going to the top 1 percent is up by almost that same amount. Given that reality, why kill the estate tax? It hits only the richest top 0.2 percent of estates and squanders 0 billion over 10

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Over at WaPo, including this section on the need to, as no less than Warren Buffett puts it, stop coddling the super-rich!

“Stop coddling the super-rich!” That was the name of a Warren Buffett op-ed from a few years ago, and while I know this is a heavier lift for Rs — “coddling the rich” is analogous to assuaging the donors — it makes no sense to waste revenue loss on the one group that’s consistently been crushing it for decades. New data from the Federal Reserve reveals that over the past few decades, the share of wealth going to the bottom 90 percent is down about 10 percentage points while that going to the top 1 percent is up by almost that same amount.

Given that reality, why kill the estate tax? It hits only the richest top 0.2 percent of estates and squanders $240 billion over 10 years for no known growth effects (the estate tax was temporarily eliminated in the 2001 tax cut, and analysts found zip in terms of growth impacts). In fact, you should take the next step and end “step-up” basis, a provision that allows heirs to avoid capital gains taxes on inherited wealth. That would also bring in north of $200 billion over 10 years.

Here’s the Fed figure to which I was referring, from the new Survey of Consumer Finances.

Increasing wealth inequality, the ill-begotten tax plan, and some potentially good news!

Source: Fed Reserve, SCF

Now, the intrepid Richard Rubin publishes this:

WASHINGTON—Senate Republicans are running into internal resistance to their proposed repeal of the estate tax, making it a potential casualty of the trade-offs the GOP faces in its effort to overhaul the tax code.

The party’s leaders included estate-tax repeal in the tax-overhaul framework they released last week. But Republican Sens. Mike Rounds of South Dakota and Susan Collins of Maine said this that week repeal isn’t necessary. Others say their desire to eliminate the tax must be balanced against other priorities including tax cuts for businesses and middle-class families.

A reminder that resistance is far from futile!

Jared Bernstein
Jared Bernstein joined the Center on Budget and Policy Priorities in May 2011 as a Senior Fellow. From 2009 to 2011, Bernstein was the Chief Economist and Economic Adviser to Vice President Joe Biden, Executive Director of the White House Task Force on the Middle Class, and a member of President Obama’s economic team. Prior to joining the Obama administration, Bernstein was a senior economist and the director of the Living Standards Program at the Economic Policy Institute, and between 1995 and 1996, he held the post of Deputy Chief Economist at the U.S. Department of Labor.

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