The idea for the modern day estate tax – a tax on very large inheritances – is commonly traced back to a speech given by President Theodore Roosevelt shortly after leaving office: “I believe in a graduated income tax on big fortunes … increasing rapidly in amount with the size of the estate.” The estate tax was enacted with the passage of the Revenue Act of 1916.
Consistent with Roosevelt’s vision, the tax applies today only to very wealthy families. In 2017, the estate tax exemption was $5.49 million for an individual, meaning a couple has an overall exemption of roughly $11 million. Only 0.2 percent of Americans pay any estate taxes when they die. That’s two out of every 1,000 people.
While advocating for his tax plan, President Donald Trump recently said, “I am doing the right thing, and it’s not good for me. Believe me.” But the estate tax repeal in his tax plan would enable Trump’s heirs and the heirs of wealthy members of his administration to save amounts of money equal to the combined net worth of thousands and thousands of U.S. families.
A new Public Citizen report puts these savings in perspective.
“I am doing the right thing, and it’s not good for me. Believe me.”
– Donald J. Trump
Trump’s Estate Tax Cut is Equal to the Combined Net Worth of About 6,000 U.S. Families of a Median Net Worth
Based on Forbes‘ estimate that Trump has a net worth of $3.5 billion, Trump’s heirs’ estimated savings from an estate tax repeal would likely be about $593 million, and could be as high as $1.4 billion. The lower figure is equal to the combined net worth of 6,000 U.S. families of a median net worth. It is equal to the combined net worth of 29,000 Hispanic or Latino U.S. families of a median net worth or 34,000 African-American U.S. families of a median net worth. [See Figure Below]
Number of U.S. Families of Median Net Worth It Would Take to Equal the
$593 Million to $1.4 Billion That Trump’s Heirs Would Realize From Estate Tax Repeal
It is important to note, in 2016 Trump’s campaign claimed he was worth “in excess of $10 billion,” according to Fortune. If this claim were true, Trump’s heirs would save between $1.7 billion and $4 billion from the repeal of the estate tax.
The Trump Administration’s Estate Tax Savings Are Equal to the Combined Net Worth of About 18,000 U.S. Families of a Median Net Worth
The combined savings for Trump’s heirs plus those of 14 of the wealthiest Trump administration officials – including Education Secretary Betsy DeVos, Commerce Secretary Wilbur Ross, National Economic Council Director Gary Cohn and Treasury Secretary Steven Mnuchin – would likely be about $1.7 billion. That is equal to the combined net worth of 18,000 U.S. families of a median net worth. These savings would be equal to the combined net worth of 83,000 Hispanic or Latino U.S. families of a median net worth or 98,000 African-American U.S. families of a median net worth. [See Tables Below]
Trump Administration Officials Estimated Savings From Estate Tax Repeal
|Name||Position||Net Worth Estimate||Estimated Savings at 17% Effective Rate||Estimated Savings at 40% Rate|
|Total||15 Trump Admin. Officials||$10,328,150,375||$1,727,735,564||$4,065,260,150|
|Donald J. Trump||President||$3,500,000,000||$593,130,000||$1,395,600,000|
|Wilbur Ross||Secretary of Commerce||$2,500,000,000||$423,130,000||$995,600,000|
|Linda McMahon||Administrator of the Small Business Administration||$1,160,000,000||$195,330,000||$459,600,000|
|Betsy DeVos||Secretary of Education||$1,000,000,000||$168,130,000||$395,600,000|
|Gary Cohn||National Economic Council||$509,000,000||$84,660,000||$199,200,000|
|Jared Kushner||Senior adviser to the president for strategic planning||$393,060,618||$64,950,305||$152,824,247|
|Steven Mnuchin||Secretary of the Treasury||$385,000,000||$63,580,000||$149,600,000|
|Reed Cordish||Special assistant to the president for intragovernmental and technology initiatives||$310,601,025||$50,932,174||$119,840,410|
|Rex W. Tillerson||Secretary of State||$300,000,000||$49,130,000||$115,600,000|
|Chris Liddell||Director of strategic initiatives for the White House Strategic Development Group||$135,652,587||$21,190,940||$49,861,035|
|Robert Lighthizer||Nominee for U.S. Trade Representative||$461,911,38||$5,982,493||$14,076,455|
|Kellyanne Conway||Counselor to the president||$276,450,09||$2,829,651||$6,658,003|
|Ben Carson||Secretary of Housing and Urban Development||$22,000,000||$1,870,000||$4,400,000|
|Elaine L. Chao||Secretary of Transportation||$22,000,000||$1,870,000||$4,400,000|
|David J. Shulkin||Secretary of Veterans Affairs||$17,000,000||$1,020,000||$2,400,000|
Number of Median Net Worth U.S. Families’ Combined Net Worth It Would Take to Equal Trump Officials’ Savings From Estate Tax Repeal
(Assuming the 17 Percent Effective Tax Rate)
|Name||Position||17% Effective Rate Savings||All||White||Hispanic||African-American|
|Donald J. Trump||President||$593,130,000||6,096||3,469||28,654||33,701|
|Wilbur Ross||Secretary of Commerce||$423,130,000||4,349||2,474||20,441||24,041|
|Linda McMahon||Administrator of the Small Business Administration||$195,330,000||2,008||1,142||9,436||11,098|
|Betsy DeVos||Secretary of Education||$168,130,000||1,728||983||8,122||9,553|
|Gary Cohn||Director of the National Economic Council||$84,660,000||870||495||4,090||4,810|
|Jared Kushner||Senior adviser to the president for strategic planning||$64,950,305||668||380||3,138||3,690|
|Steven Mnuchin||Secretary of the Treasury||$63,580,000||653||372||3,071||3,613|
|Reed Cordish||Special assistant to the president for intragovernmental and technology initiatives||$50,932,174||523||298||2,460||2,894|
|Rex W. Tillerson||Secretary of State||$49,130,000||505||287||2,373||2,791|
|Chris Liddell||Director of strategic initiatives for the White House Strategic Development Group||$21,190,940||218||124||1,024||1,204|
|Robert Lighthizer||Nominee for U.S. Trade Representative||$5,982,493||61||35||289||340|
|Kellyanne Conway||Counselor to the president||$2,829,651||29||17||137||161|
|Ben Carson||Secretary of Housing and Urban Development||$1,870,000||19||11||90||106|
|Elaine L. Chao||Secretary of Transportation||$1,870,000||19||11||90||106|
|David J. Shulkin||Secretary of Veterans Affairs||$1,020,000||10||6||49||58|
If the government cracked down on estate tax avoidance and closed loopholes, and the 15 individuals in the Trump administration eventually paid top statutory rate of 40 percent, the heirs of wealthy Trump administration officials would owe about $4.1 billion in estate taxes.
Proponents of estate tax repeal, like House Speaker Paul Ryan, claim that the estate tax hurts “family farms” or “small businesses.” In fact, it affects only the wealthiest 0.2 percent of estates, because it doesn’t even take effect until a couple has at least $11 million. It would be quite a stretch to refer to Donald Trump, billionaire Commerce Secretary Wilbur Ross or Goldman Sachs alumnus turned economic adviser Gary Cohn as family farmers or small business owners.
The administration is choosing to propose this massive tax break for the super wealthy and at the same time it alleges that the government just can’t afford funding for Medicare, Medicaid, women, infants, and children nutrition assistance programs, grants for teacher training and affordable housing, or medical research.
When touting the supposed benefits of the Republican’s healthcare plan, Speaker Paul Ryan cheered the $337 billion in estimated savings over a decade as a major accomplishment. The savings were in large part due to the fact that the plan would leave 24 million more people uninsured.
Repealing the estate tax will cost close to $300 billion over a decade.
One can learn a lot about an administration by how it values $300 billion. Healthcare for 24 million or massive tax cuts to the wealthiest 0.2 percent of estates – including the president’s.
The administration found only the latter to be worth the cost.