Estate Tax a Key Tool for Fighting US Inequality

Caroline Freund at PIIE:

Estate Tax a Key Tool for Fighting US Inequality: This year marks the 100th anniversary of the US estate tax, which affects only the ultra-wealthy. Given the rising focus on American income inequality, the tax should be on solid ground. Not so.

Republican presidential candidate Donald Trump has vowed to eliminate the estate tax, while Democrat candidate Hillary Clinton wants to revive it …

There are good reasons to support this tax:

As I have pointed out previously, there is no productive activity in inheriting a large sum of money, so it does little to distort the economy.

Estate taxes also raise revenue and redistribute wealth. …

Historically such taxes have worked well in the United States. …

The future of the estate tax will depend heavily on the upcoming presidential election. Donald Trump would like to see it gone. This is not unthinkable, since in a largely symbolic vote last year the House of Representatives voted to abolish it. …

Hillary Clinton proposes higher estate tax brackets as wealth increases, reaching 65 percent for a billionaire couple. My guess is that if people really understood the incidence of the tax, 99.8 percent of the population would support her proposal.