It appears Hillary Clinton just embraced one of Bernie Sanders’ big ideas for soaking the rich. As the Committee for a Responsible Budget notes in a new report out on Thursday, the Democratic nominee has radically revamped her plan to raise the estate tax—and in the process, effectively declared war on the Rich Kids of Instagram.
Previously, Clinton said she would restore the tax on dead rich folks to its 2009 levels, pushing up the rate from 40 percent to 45 percent, and making it kick in for estates worth at least $3.5 million (today, it only hits those valued at $5.45 million or more). But, no longer. Instead, she’s borrowed a page from her formal primary rival, and now proposes turning the levy into a progressive tax—meaning it will take a bigger bite out of wealthier estates—with a top rate of 65 percent. The last time the estate tax hit that level was in 1982, though back then it also kicked in on smaller inheritances.
Beyond all that, Clinton has said she would largely do away with the step-up in basis at death, a rule that allows lucky heirs to avoid paying capital gains taxes that, say, their parents or uncle or other rich benefactor would have owed had they sold their stock before passing away.
In the end, the committee expects these measures to raise about $225 billion over 10 years.
Of course, none of this will pass Congress so long as Republicans control at least one half of it. I mean, House Speaker Paul Ryan wants to eliminate the estate tax altogether. So does Donald Trump, for that matter. But politically, this feels significant. Conservatives have fought a long battle to brand the estate tax as a morally abhorrent “death tax,” and in the process they’ve convinced a lot of Americans who would never, ever, ever come close to being bitten by the thing that it should nonetheless be slashed. Clinton is effectively saying that mainstream Democrats aren’t afraid to fight this battle and push for bigger taxes on exorbitantly large intergenerational transfers of wealth. If they ever get control of both Capitol Hill and the presidency again, they might just drink this kid’s milkshake—er, jeroboam of Dom.
Update, Sept. 22, 2016, at 3:15 pm: The CFRB’s graph contained an error that it has since corrected. The original showed Clinton’s top estate tax rate kicking in at $500 million, rather than at $1 billion. I’ve swapped in the fixed chart, but no text in this article has been changed.
*Correction, Sept. 22, 2016: The headline on this article that appears in Google searches and browser tabs originally stated that Clinton’s estate tax hike would be larger than Sanders’ version. It will not be.