Presidential candidate Hillary Clinton has proposed increasing the estate tax to a top rate of 65 percent, arguing, in effect, that the rich have been getting away with murder and enraging small-business owners and farmers who worry a higher estate tax could put them out of business.
Clinton wants to cut the exemption for the "death tax" from $5 million today to $3.5 million, with a 45 percent tax on amounts between that and $10 million. She'd set a 50 percent rate on assets over $10 million, 55 percent over $50 million and 65 percent on amounts exceeding $500 million for an individual, $1 billion for married couples. As with the progressive income tax, each rate applies until the next threshold is reached, when the next rate kicks in.
The estate-tax increase would generate $75 billion over the next decade, according to the nonpartisan Committee for a Responsible Federal Budget. The tax increase and other new tax proposals from Clinton are to pay for her plans to simplify small-business taxes and expand the child tax credit.
Meanwhile, Donald Trump wants to get rid of the estate tax entirely, saying that would spur economic growth. But he would apply capital gains tax upon the owner's death, with exemptions for small businesses and family farms on the first $10 million in assets.
But it is Clinton's proposal that has drawn the most attention, because of its overall increase in the tax bite.