The belief that one's station in life is not predetermined by titles conferred by royalty to one's forebearers or the manner of one's upbringing is so core to our national identity that it has been labeled "The American Dream." But, in 2007, billionaire Warren Buffet declared that "Dynastic wealth, the enemy of a meritocracy, is on the rise. Equality of opportunity has been on the decline." That decline has only gotten worse as a result of the recession. The decline in equal opportunity is largely a product of a tax code that has been designed to favor the already rich and increasingly unequal access to education opportunities. It is those problems that we must come together today to fix.
Since 2002, Congress has waged war on estate and gift taxes, reducing tax rates and raising the amount exempted from estate taxes to as high as $10 million per couple. In doing so, they have limited the estates subject to tax to only a small set of households and facilitated untaxed intergenerational transfer of wealth on a massive scale. At the same time, estate planners are able to use complex systems of trusts and other vehicles to shield transferred wealth from taxation. The result of these policies is that one’s means at birth are allowed to play a greater role in determining one’s future potential and the government is deprived of revenues that could be used to provide the less fortunate with a path to realize the American Dream—providing them not with government handouts but instead with the opportunity to realize their potential.
Since early in the industrial revolution, public education has been a key source of class mobility. Yet, even as we have become the world's leading economic power, we have allowed education to subjugate rather than empower the less fortunate. The achievement gap in primary and secondary schools leaves poorer students less able to compete for high wage, high skill, jobs. Those who are able to excel academically are either forced to accumulate enormous amounts of debt or find their higher education options, and associated future employment prospects, limited by their means. In either case, the circumstances they are born into help determine and limit what they can become.
The fiercest advocates for equal opportunity are often those whose lives embody the American Dream. Bill Gates, through his charitable foundation, has given numerous scholarships to disadvantaged youth so they can pursue their own dreams. Mark Zuckerberg recently gave $100M, his largest contribution to date, to a public school district in Newark, NJ so that they can better prepare their students for their futures. And Warren Buffet has been a staunch advocate for the estate tax and raising income tax rates on the nation's highest earners. In fact, over 69 billionaires have already signed a “giving pledge” to give at least half of their wealth to charity upon their deaths, most of whom started or grew businesses. These job creators know that they could not have accomplished what they did if their circumstances at birth were allowed to dictate their paths in life, and they want to ensure that the next generation has the opportunities that they had. Opportunity to innovate, to build businesses, and to create jobs.
Whether one has a desire for social justice and a belief in the American Dream does not depend on the size of one's bank account. Our nation's founding fathers were wealthy landowners who pledged their "lives, fortunes, and sacred honor" to escape British rule and establish our democracy. In that spirit, we must come together, rich and poor, to restore the American Dream. To that end, I will be sending a new bill, the Restoration of the American Dream Act to Congress next week. This bill creates a progressive system of estate and gift taxes, closes loopholes used to shield transferred wealth from taxes, and uses the proceeds to both support our nation's most disadvantaged school districts and create a new education grant program to ensure that our nation's highest achieving students have access to affordable college educations. The bill is deficit neutral and reflects our need to live up to our values, not a desire to increase the size of government beyond what we can afford. I hope Congress will consider the inheritance we all leave the next generation of Americans when they discuss this bill, and choose to reinforce our commitment to the American Dream.
Thank you. God bless you. And god bless the United States of America