Isn’t it rich? House tax plan kills the estate tax
For voters who chose Donald Trump on the grounds that he would champion the little guy while taking down bicoastal elites, the tax plan the president has been touting must have come as a shock.
Under the proposal, some middleclass Americans would see their taxes drop. Others — particularly those who live in states with hefty income taxes, or those who have big mortgages or medical bills — would see their federal tax bills go up.
Net individual taxes would go down
$300 billion over 10 years, according to the Committee for a Responsible Federal Budget. Corporations and closely held companies, on the other hand, would see a net cut of $1 trillion.
And families passing large estates from one generation to the next would get the most concentrated and least justified tax break of all. The phased repeal of the estate tax in the House Republican measure would cost at least
$172 billion over the next 10 years. As soon as the measure is enacted, the amount of an inheritance excluded from the federal tax would double, from
$5.5 million to $11 million (or in the case of a couple passing on wealth, from
$11 million to $22 million). That exclusion is certainly high enough to cover the vast majority of family farms and businesses. Starting six years after enactment, the tax on inherited wealth above the exclusion levels would drop from 40% to 0%. That’s right, zero.
Here’s another way to look at it: The average American household might save $1,200 a year under the Republican tax plan. Meanwhile, the average family now subject to the estate tax over the next 10 years would save about
$3.2 million. (If Trump were to leave say $3 billion to his heirs, they alone would save more than $1 billion.)
Why Congress would want to concentrate so much savings on such an impossibly small sliver of people is hard to explain, except as a reward to wealthy Republican donors who’ve long been clamoring for repeal of what they call the “death tax.”
Actually, dead people don’t pay taxes. They’re dead. And if government has to get revenue from somewhere, collecting it from people fortunate enough to be born into ultra rich families isn’t a bad place to turn.
Money raised from the estate tax each year is nearly enough to fund the combined budgets of the FBI, the Coast Guard and the Centers for Disease Control and Prevention. It is one of the fairest and least damaging taxes on the books. It reduces the burden on far less affluent taxpayers. It should not be eliminated.