“The really big fortune, the swollen fortune, by the mere fact of its size, acquires qualities which differentiate it in kind as well as in degree from what is possessed by men of relatively small means. Therefore, I believe in a graduated income tax on big fortunes.”
That’s what Teddy Roosevelt proposed in his agenda-setting “New Nationalism” speech from 1910, when he prodded the United States toward a fuller embrace of progressive reform. As a former president who was preparing to again bid for the position, Roosevelt opened a conversation about tax policy in order to frame a broader debate about at least some of the values that should guide American progress.
At the heart of Roosevelt’s agenda was a specific form of taxation. While progressive taxation in a general sense was desirable and necessary, Roosevelt was particularly enthusiastic about “another tax which is far more easily collected and far more effective—a graduated inheritance tax on big fortunes, properly safeguarded against evasion, and increasing rapidly in amount with the size of the estate.”
Teddy Roosevelt, it should be noted, was a Republican who possessed considerable wealth of his own. He was a flawed figure who let down the progressive cause at many turns and never matched the courageous domestic and foreign policy vision advanced by his rival for leadership of the progressive movement, Wisconsin Senator Robert M. La Follette. But Roosevelt recognized that taxing inherited wealth not merely to collect revenues but to preserve and extend democracy.
“The absence of effective state, and, especially, national, restraint upon unfair money-getting has tended to create a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power,” he explained. “The prime need to is to change the conditions which enable these men to accumulate power which it is not for the general welfare that they should hold or exercise.”
Roosevelt’s critics may have characterized him as a radical, but he was never as radical (or as right) as La Follette. Roosevelt was, however, conscious of the threats posed to the American experiment by the rapid consolidation wealth and power. And he knew that progressive taxation could be used to address those threats.
Bernie Sanders knows this, as well. That’s why Sanders is proposing a progressive estate tax on the fortunes of the top 0.2 percent of Americans. The senator from Vermont’s newly introduced “For the 99.8% Act” would collect $2.2 trillion from 588 billionaires.
“At a time of massive wealth and income inequality, when the three richest Americans own more wealth than 160 million Americans, it is literally beyond belief that the Republican leadership wants to provide hundreds of billions of dollars in tax breaks to the top 0.2 percent,” argues Sanders. “Our bill does what the American people want by substantially increasing the estate tax on the wealthiest families in this country and dramatically reducing wealth inequality. From a moral, economic, and political perspective our nation will not thrive when so few have so much and so many have so little.”
Sanders is widely expected to bid for the Democratic presidential nomination in 2020. If he does so, Sanders will not be the only contender with a bold plan to tax the rich. Massachusetts Senator Elizabeth Warren, for instance, has a plan to levy a 2 percent tax on the assets of wealthy Americans with more than $50 million. From those with over $1 billion, she’d demand an additional 1 percent.
The Democrats who seek to dislodge Donald Trump in 2020 will all need to make tax policy a priority. Republicans have for so long practiced reverse Robin Hood politics—take from the poor and give to the rich—that the promised Democrats make will be unobtainable without the infusion of revenues that comes from taxing the wealthy. Changing tax policy also infuses governing with democracy, as it dials down the influence of specially interested billionaires (such as the Koch brothers) and their corporations.
What is notable about the Sanders plan is that, with his proposal to establish a 77 percent tax on the value of an estate above $1 billion, the senator is merely seeking “a return to the top rate from 1941 through 1976.”
Sanders is proposing an approach that renews American values, as notes University of California–Berkeley economics professor Emmanuel Saez. “The estate tax was a key pillar of the progressive tax revolution that the United States ushered one century ago. It prevented self-made wealth from turning into inherited wealth and helped make America more equal,” explains Saez. “However, the estate tax is dying of neglect, as tax avoidance schemes are multiplying and left unchallenged. As wealth concentration is surging in the United States, it is high time to revive the estate tax, plug the loopholes, and make it more progressive. Senator Sanders’ bill is a bold and welcome leap forward in this direction.”
Teddy Roosevelt understood this economic calculus, and this democratic imperative.
“In every wise struggle for human betterment one of the main objects, and often the only object, has been to achieve in large measure equality of opportunity. In the struggle for this great end, nations rise from barbarism to civilization, and through it people press forward from one stage of enlightenment to the next,” the Republican president explained in 1910. “One of the chief factors in progress is the destruction of special privilege. The essence of any struggle for healthy liberty has always been, and must always be, to take from some one man or class of men the right to enjoy power, or wealth, or position, or immunity, which has not been earned by service to his or their fellows. That is what you fought for in the Civil War, and that is what we strive for now.”