Friday, June 26, 2020
New York Times op-ed: Tax the Rich and Their Heirs, by Lily Batchelder (NYU):
A massive transfer of wealth is underway and will accelerate in the coming years. Baby boomers and the generation that preceded them currently own $84 trillion, or 81 percent of all U.S. household wealth — wealth that will before long be inherited by their children and other beneficiaries.
This extraordinary transfer of resources will further cement the economic inequality that plagues the United States because this wealth is tightly concentrated in the hands of a few. And it will be passed on as taxes on such transfers are at historic lows.
Among high-income countries, the United States has one of the lowest levels of intergenerational economic mobility, meaning a child’s economic future is heavily influenced by his or her parents’ income. We have the second-highest level of income inequality after taxes and government transfers, and the highest level of wealth inequality. These disparities are sharply skewed by race. Median black household wealth is only 9 percent that of white households, a racial wealth gap that is even larger than in 1968. New research suggests the pandemic will further increase wealth inequality, as the affluent save more and the poor earn less.
Effectively addressing these systemic inequalities will require many things. But increasing the taxation of inheritances is one vital component. ...
We know how to tax inheritances more fairly. We need to act before the massive wealth transfers on the horizon further entrench a hereditary economic elite.
Lily Batchelder (NYU), Leveling the Playing Field between Inherited Income and Income from Work Through an Inheritance Tax (reviewed by Mirit Eyal-Cohen (Alabama) and Ted Seto (Loyola-L.A.))