WASHINGTON — With key provisions of the Tax Cuts and Jobs Act set to expire at the end of 2025, Congress faces a critical opportunity to reshape the nation’s tax code. Amid debates over how to balance revenue needs with economic fairness, the Progressive Policy Institute (PPI) offers a bold new framework to transform how intergenerational wealth transfers are taxed.
A new report titled “A Better Way to Tax Unearned Income,” authored by PPI Vice President for Policy Development Ben Ritz and Policy Analyst Alex Kilander, offers federal policymakers a detailed technical framework for a new inheritance tax that would progressively raise revenue and counter the political vulnerabilities that have hobbled the current estate tax. If enacted, PPI’s proposal could generate several hundred billion dollars in revenue over the next decade without slowing economic growth, providing tax writers with a promising option to extend some income tax cuts for workers without increasing the national debt.
“Nobody should pay more in taxes on income they earn through their own hard work or risk-taking investments than they do on the income they inherit simply for being born into a wealthy family,” said Ritz. “Every dollar raised by taxing unearned inheritance is one that does not need to be raised by taxing the earned incomes of working Americans.”
Although polls consistently show high levels of public support for taxing wealthy Americans who are exclusively affected by the current estate tax, the tax itself has become deeply unpopular with the general public after years of anti-tax advocates arguing that, because taxes are already levied on the income a person earns during their lifetime, taxing the assets a person leaves behind is an unfair “death tax” that amounts to double taxation. The estate tax is further undermined by large exemptions and loopholes that make it easy to avoid for even the wealthiest families.
PPI’s proposal tackles these challenges by:
The new report expands upon one of six dozen ideas PPI’s Center for Funding America’s Future proposed this summer as part of a comprehensive blueprint for putting the federal budget on a path to balance within 20 years. That blueprint can be found here.
Read and download the new report here.
Launched in 2018, the Progressive Policy Institute’s Center for Funding America’s Future works to promote a fiscally responsible public investment agenda that fosters robust and inclusive economic growth. To that end, the Center develops fiscally responsible policy proposals to strengthen public investments in the foundation of our economy, modernize health and retirement programs to reflect an aging society, transform our tax code to reward work over wealth, and put the national debt on a downward trajectory.
The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org.
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Media Contact: Ian O’Keefe – iokeefe@ppionline.org
