With the Presidential Election just over a month away and the first debate this week, Hillary Clinton recently revealed her revised positions on the federal estate tax. The estate tax applies after death to the estates of wealthy people who have accumulated assets above a threshold – the estate tax exemption. The estate tax exemption is $5,450,000 for deaths in 2016. The top estate tax rate is 40%.
Secretary Clinton previously indicated she wanted to increase the top estate tax rate from 40% to 45%. Last week (borrowing an idea from Bernie Sanders) Clinton announced her revised estate tax plan – with a lower exemption and a higher top rate. Under Clinton’s new proposal, estates above $3.5 million would be subject to a 45% tax. The rate would stair-step to 50% above $10 million, 55% above $50 million, and hit a 65% top rate on decedents with assets exceeding $500 million.
In stark contrast, Donald Trump wants to completely repeal the federal estate tax.
Of course, a proposal is one thing and successfully navigating a bill through Congress is another. While the estate tax directly affects a relatively small number of voters a change such as proposed by Clinton may appeal to voters concerned with “income inequality” even though the additional tax revenues realized under such a plan may prove to be miniscule. Still, it will be interesting to see if and how the estate tax is addressed during the debates and how this plays out as the candidates campaign over the coming weeks.