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On April 18, Sen. Bernie Sanders (I-VT) reintroduced his “tax-the-rich” bill, the “For the 99.5 Percent Act,” in the Senate. The bill was reintroduced in the House by Rep. Jimmy Gomez (D-CA). The bill would impose higher estate tax rates on those who inherit more than $3.5 million.

The bill would:

  • Exempt the first $3.5 million of an individual’s estate from the estate tax
  • Establish a new set of rates for estates valued at more than $3.5 million, as follows:
    • 45 percent on the value of an estate between $3.5 million and $10million
    • 50 percent on the value of an estate between $10 million and $50 million
    • 55 percent on the value of an estate between $50 million and $1 billion
    • 65 percent on the value of an estate in excess of $1 billion
  • End “dynasty trusts” by 
    • Strengthening the generation-skipping tax by applying it with no exclusion to any trust set up to last more than 50 years
    • Bar donors to grantor-retained annuity trusts (GRATs) from taking assets back from these trusts within two years to avoid gift taxes
    • Impose income tax liability on earnings generated by assets in grantor trusts
    • Limit the gift tax exclusion for gifts made to trusts

The legislation would also change the rules on valuation discounts. It also includes special rules for family farms.

Prospects: While the GOP controls the House, this legislation has little to no chance of being considered, much less enacted. However, Republicans on the Ways & Means Committee are interested in estate tax rules, and so elements of this bill—especially the grantor trust proposals—may find their way into the discussion as the House GOP tax package moves forward. NAIFA will watch this issue carefully.

NAIFA Staff Contact: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org.