Giving tax relief to the wealthiest Americans is a great way to provoke rage among the working class and poor. We need only remember what happened to Marie Antoinette when she allegedly said “let them eat cake” when told about the starving masses in France. For her indifference to their suffering, she and many other royals were executed during the French Revolution. The Romanovs in Russia met a similar fate.
These are of course some of the more extreme examples of the result of immense economic inequality, but they do serve as a sobering reminder for those of us who are fortunate enough to count ourselves among America’s wealthy.
We do not need our taxes cut — we already pay much lower income taxes than many other industrialized nations. People like to complain about how high our tax rates are, and yet, when compared to Denmark’s top rate of 60 percent or Sweden’s of 56 percent, our top rate of 39 percent is quite modest. And that doesn’t even take into account the deductions, exemptions and loopholes that we at the top are most equipped to take advantage.
All of that is on earned income. Most wealthy people earn their money through capital gains. The top capital gains rate is a mere 20 percent, meaning that effectively many wealthy Americans pay a lower tax rate than many working- and middle-class Americans. We have accrued enormous wealth and had to pay relatively little of it back into our communities and our nation. We don’t need to pay even less.
We most especially do not need to cut estate taxes, or worse, repeal them entirely. After all, a married couple can currently leave nearly $11 million to their heirs tax free and there are many other ways for them to gift money before the tax kicks in. Each person can give another person $14,000 every year tax free (or a couple can give $28,000). If they have two children, they can thus give away $56,000 tax-free every year to the children together — and more to their spouses or their children.
Thus, estate taxes are assessed only on what has not been gifted during life if these limits are followed. In 10 years a wealthy couple could the gift away $560,000 to their two children. Meanwhile, the majority of Americans are worried sick about paying bills, buying a house, accessing health care and saving something for retirement.
The estate tax applies only to the wealthiest Americans. Only 0.2 percent will ever pay the estate tax, and those that do can certainly afford it. At a time when economic inequality is at a near record-breaking high in the United States, we quite simply cannot afford to repeal one of our best protections against it.
We ignore the plight of working class and poor Americans at our own peril. No tax cut is worth the social upheaval caused by more tax cuts for the wealthy. And certainly no tax cut is worth leaving our fellow Americans unable to afford even the most basic of necessities.
Karen Seal Stewart is a member of the Patriotic Millionaires, a group of hundreds of high-net-worth Americans who are committed to making all Americans better off by building a more prosperous, stable and inclusive nation.