The tent pole of the retirement and savings plan Hillary introduced today was the “universal 401k” that would give tax breaks to all Americans who want to experience “the miracle of compound interest,” and matching funds of up to $1000 a year for couples earning less than $100,000. Businesses would get tax credits for helping to set up the accounts (which, in Clinton’s vision, would be managed by direct deposit). The plan, estimated to cost about 20-25 billion a year (the second most expensive proposal she’s made), would be paid for by “freezing the estate tax at its 2009 level of $7 million per couple. According to the Joint Committee on Taxation, freezing the estate tax at that level and avoiding outright repeal generates more than $400 billion over ten years.”
Hillary framed this by saying, “For every one wealthy estate facing a less-generous estate tax exemption, thousands of middle class families will receive a tax cut that will help them…one day own an estate of their own.” I’m fairly certain that Republicans will go nuts over this: Giuliani has made “eliminating the death tax” a weirdly broad plank in his campaign platform; if you’ll recall, he — or his advance team — went so far as to cancel an event at an Iowa farm that was not large enough to qualify for the tax he wants so badly to end.
But Democrats here in Iowa love the idea. One Obama supporter, at a Hillary rally to “educate myself,” said maybe they should take the ceiling even lower: “I can’t think of a better way to raise money than to take it from dead rich people.” And it’s true, even if the cut-off was lower — much lower — the penalty would impact an absurdly pitiful number of people. According to the Congressional Budget Office, nationwide, as of 2000 there were only 65 family farms that are values at more than $3.5m, and 94 business estates total. The campaign supplied even more specific numbers (from the Coalition for America’s Priorities): In Iowa, if the cut-off was $5m, 99.9 percent would pay no estate tax — and there are only 23 individual estates in Iowa worth more than that…though I am sure they all caucus.