Our Zombie Tax on Dynastic Wealth
In our tax-cut era, the carve outs for huge inheritances just kept getting bigger. And that trend continued last week.
Hey Optimists!
Robin here. Sure, Tuesdays are for optimism… but sometimes they are really busy, too, when you’re still catching up after a week of leisure consumption.
On the podcast: The Estate Tax
We decided to talk about the estate tax in June after seeing this article in the Washington Post laying out what the then-proposed tax bill would do to the estate tax. But it wasn’t the article so much as the comments section that convinced me that there was a lot to clear up about this tax that applies to so very few people.
Between when we recorded the episode and when it was released, of course, the tax bill passed with a tie-breaking vote in the U.S. Senate and was signed into law. The change made in the just-enacted tax bill raised the exemption to $15 million for individuals (yes, that’s $30 million for a married couple). It’s also permanent, unlike the 2017 tax bill during the first Trump administration. And it will continue to go up, indexed to inflation, in future years.
I’m no STEM major, but even I can make a chart of how this looked in our “tax-cut” era since 2000.
In other words, the estate tax isn’t dead-dead, but it’s mostly a zombie that can’t even take a bite from the top 1% of Americans, whose collective $50 trillion in wealth is protected by a phalanx of tax-avoidance professionals with legal tools.
Here’s a little excerpt:
As always, you can listen to the whole episode, The Tax We’re 99.93% Sure That You Will Never Pay, wherever you get your podcasts.
On the Substack
Over on our de-facto website on Substack, we posted a few new letters to the editor about medical school debt and housing policy.
We’ve also got an Optimist Chat going for any paid subscribers. If you supported us on Buy me a Coffee but want to join the chat, reach out and we’ll get you set up.
What We’re Reading
No one can grasp trillions. After our podcast on the National Debt, I joked about trying to figure out how much of that $37 trillion or so was “mine.” UCLA finance professor Ivo Welch did the math for me in a Los Angeles Times op-ed. “With ‘only’ 154 million taxpayers, this means that the average taxpayer’s piece of the $37-trillion federal debt is about $240,000, or six years of the median income.”
There are links to other interesting stuff on our Podcast page, including the backstory about Stockholm Syndrome.
Got questions?
As always, send us your economic questions, share your economic anxieties, by emailing us at optimist.economy@gmail.com. We’re recording our next Q&A in a week, so if you’ve got a question, now’s the time to raise your hand.
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I should probably note that at 45:42 into the episode on the US estate tax, there is a sweet “And y’all, I gotta tell you…”
Yes, yes, excellent discussion, great insight into public skittishness about the tax. Fine. But some of us are also here for Katherine’s promised vocal morph into a true Houstonian.
Sidebar: I would like an episode on how and why different states receive different amounts of support from the Federal gov’t, measured per-capita, and whether there is a better (however you measure “better”) way to calculate and distribute that support.