Democrats’ plan to pay for $3.5 trillion spending bill

CNBC Television published this video item, entitled “Democrats’ plan to pay for $3.5 trillion spending bill” – below is their description.

CNBC’s Ylan Mui joins Power Lunch to report on tax hikes proposed by Democrats to pay for President Biden’s $3.5 trillion spending proposal. For access to live and exclusive video from CNBC subscribe to CNBC PRO:

Democrats may scuttle tactics used by the rich to pass wealth to heirs with little to no tax, part of a broader plan to raise money for an expansion of the U.S. safety net.

Specifically, the party is considering disallowing some complex trust-planning techniques used by wealthy Americans to avoid estate tax, according to a discussion list of potential tax reforms obtained by CNBC.

Congressional Democrats may also ask the Treasury Department to update regulations to “prevent the abuse of non-economic valuation discounts,” according to the list. This concept applies, for example, to entrepreneurs who give a minority interest in their business to their kids at a discounted rate.

The reforms are largely aimed at multimillionaires or billionaires who use the strategies to remove wealth from their estate and transfer it to heirs tax-free, according to estate-tax experts.

“Basically, you’ve got this basket of loopholes that collectively can be used to defeat the estate tax at really any level, even billionaires,” according to Robert Lord, counsel for progressive group Americans for Tax Fairness.

The list, a draft of ideas lawmakers assemble before formally pitching them in the House or Senate, doesn’t contain many specifics. It identifies “grantor-retained annuity trusts” and “intentionally defective grantor trusts” as the trusts in question.

Interestingly, Democrats don’t seem to be weighing reforms to the estate tax itself, such as a higher tax rate or a reduced asset threshold that would subject more estates to federal levies.

A 40% federal tax rate currently applies to estates and gifts valued at more than $11.7 million for individuals and $23.4 million for married couples.

That asset threshold will fall after 2025 even if Democrats don’t touch it, due to sunset provisions in the 2017 Tax Cuts and Jobs Act. (Roughly $6 million and $12 million, respectively, would be exempt from the tax — half the current value — at that time.)

Higher taxes

The proposed estate-tax reforms are part of Democrats’ broader theme of raising taxes on the wealthy to help fund climate, paid leave, childcare and education measures, the cost of which may be as high as $3.5 trillion.

President Joe Biden has said households earning less than $400,000 a year would not see a higher tax bill.

Some of the potential estate-tax reforms share elements of recent Democratic proposals, such as the “For the 99.5% Act” co-sponsored by several lawmakers like Sen. Bernie Sanders, I-Vt.

Critics argue the burden of some estate-tax reforms wouldn’t only impact the rich but would extend to others like family farmers.

“Many Democrats love to talk about taxing the richest of the rich, but in reality, their proposals would hurt Main Street far more than Wall Street,” Rep. Glenn Thompson, R-Penn., ranking member of the House Agriculture Committee, said of the various recent estate-tax proposals.

Grantor-retained annuity trusts

Let’s look at grantor-retained annuity trusts, one of the techniques in question, as an example of how individuals sometimes use trusts to shield wealth from tax.

These trusts — also known as GRATs — have been leveraged by numerous millionaires and billionaires, including the Trump family, Facebook CEO Mark Zuckerberg, the Walton family (of Wal-Mart fame) and former Goldman Sachs Chairman Lloyd Blankfein. Casino magnate Sheldon Adelson, who died earlier this year, reportedly used the trusts to shield billions of dollars from tax.

» Subscribe to CNBC TV:

» Subscribe to CNBC:

» Subscribe to CNBC Classic:

Turn to CNBC TV for the latest stock market news and analysis. From market futures to live price updates CNBC is the leader in business news worldwide.

The News with Shepard Smith is CNBC’s daily news podcast providing deep, non-partisan coverage and perspective on the day’s most important stories. Available to listen by 8:30pm ET / 5:30pm PT daily beginning September 30:

Connect with CNBC News Online

Get the latest news:

Follow CNBC on LinkedIn:

Follow CNBC News on Facebook:

Follow CNBC News on Twitter:

Follow CNBC News on Instagram:



CNBC Television YouTube Channel

Got a comment? Leave your thoughts in the comments section, below. Please note comments are moderated before publication.

About This Source - CNBC Television

CNBC is an American pay television business news channel, which primarily carries business day coverage of U.S. and international financial markets. Following the end of the business day and on non-trading days, CNBC primarily carries financial and business-themed documentaries and reality shows.

As of February 2015, CNBC is available to approximately 93,623,000 pay television households (80.4% of households with television) in the United States.

Recent from CNBC Television:

  • 13,000 Haitian migrants cross into Texas
  • Security very tight around U.S. Capitol ahead of far-right rally
  • We are currently speaking with the Laundrie family, not Brian, says police spokesman
  • In This Story: Bernie Sanders

    Bernard Sanders is an American politician who has served as the junior United States Senator from Vermont since 2007 and as U.S. Representative for the state’s at-large congressional district from 1991 to 2007. He is the longest-serving independent in U.S. congressional history, although he has a close relationship with the Democratic Party, having caucused with House and Senate Democrats for most of his congressional career.

    Sanders unsuccessfully sought the Democratic Party nomination for president of the United States in 2016 and 2020, finishing in second place in both campaigns.

    Books #Ad

    3 Recent Items: Bernie Sanders

  • ‘Terrible shame’ if both infrastructure and budget bills don’t pass: Sanders | ABC News
  • Picture This: Ariana Grande, Bernie Sanders | The Tonight Show Starring Jimmy Fallon
  • Harris Says Biden’s Child Tax Credit Will Lift U.S. Children Out of Poverty
  • In This Story: Democrats

    “Democrats” usually refers to the The Democratic Party of the United States – one of the two major political parties in the country, along with its main, historic rival, the Republican Party.

    It was founded on 8th January 1828 and has its contemporary headquarters in Washington, D.C., United States. The present leadership is Nancy Pelosi (Party leader) and Jaime Harrison (Party chair).

    2 Recent Items: Democrats

  • If Dems don’t pass spending bill it will be a ‘huge defeat’: Chris Wallace
  • Wall Street Week – Full Show (09/17/2021)
  • In This Story: Donald Trump

    Donald John Trump was the 45th President of the United States. Before entering politics, he was a businessman and television personality. Trump was born and raised in Queens, a borough of New York City, and received a bachelor’s degree in economics from the Wharton School.

    5 Recent Items: Donald Trump

  • New immigrant surge from Haiti should prompt Mayorkas impeachment: Miller
  • Tight security in Washington, DC ahead of rally for Capitol riot defendants
  • Security very tight around U.S. Capitol ahead of far-right rally
  • Georgia prosecutor quietly pursues case against Trump
  • Milley Defends China Calls After Book Cites Alarm Over Trump
  • In This Story: Joe Biden

    Joe Biden is an American politician serving as the 46th and current president of the United States. A member of the Democratic Party, he served as the 47th vice president from 2009 to 2017 under Barack Obama and represented Delaware in the United States Senate from 1973 to 2009.

    He is married to Dr Jill Biden.

    Books by Joe Biden #Ad

    6 Recent Items: Joe Biden

  • France recalls ambassadors to US, Australia over AUKUS submarine deal | DW News
  • Milley Defends China Calls After Book Cites Alarm Over Trump
  • UN Secretary-General on Climate Change, Afghanistan, U.S.-China
  • COVID-19: FDA panel backs Pfizer booster only for 65+, high-risk Americans
  • What President Joe Biden’s economic plan could mean for markets
  • President Joe Biden on his economic plan: The wealthy play by a different set of rules
  • Leave a Comment

    We don't require your email address now, just your name. BUT, if you do add it, you may be notified if there are replies to your comment. Please make respectful comments, which add value, and avoid personal attacks on others. Comments failing to adhere to these guidelines will not be published.