Photo: Washington Post Photo By Melina Mara
WASHINGTON – Three Republican senators introduced a plan Monday to repeal the federal estate tax, moving to eliminate a tax on a small number of the wealthiest households just as leading Democrats ramp up calls to tax the richest Americans.
Senate Majority Leader Mitch McConnell, R-Ky., joined Sens. Chuck Grassley, R-Iowa, and John Thune, R-S.D., members of the Senate Finance Committee, in releasing legislation to permanently repeal the federal estate tax, which conservatives refer to as “the death tax.”
The Republican tax law passed in 2017 already dramatically weakened the estate tax, allowing couples with $22 million to pass on their estates without facing the tax.
In 2018, following the GOP tax law, only 5,000 taxpayers were expected to file estate tax returns, according to projections by the American College of Trust and Estate Counsel, an organization of estate attorneys, based on Internal Revenue Service data. About 1,700 families are expected to actually pay the tax annually, said Howard Gleckman, a tax expert with the Tax Policy Center, a nonpartisan think tank.
The GOP’s renewed push to outright eliminate the estate tax comes the week after presidential candidate Sen. Elizabeth Warren, D-Mass., proposed a new 2 percent “wealth tax” on Americans with more than $50 million, as well as a 3 percent tax on those with over $1 billion. Warren’s tax would affect 75,000 of the wealthiest U.S. families.
Conservatives have said the estate tax unfairly takes from Americans who already paid taxes on assets at the time they were acquired, while liberals counter higher taxes on the rich are necessary to bring in federal revenue and level the economic playing field.
“On the right, death is not a taxable event, and the estate tax represents double taxation and an administrative headache,” said Brian Riedl, conservative economist at the Manhattan Institute, a right-leaning think tank. “On the left, the estate tax is a vital source of eliminating inequality. It’s a completely different framework.”
Before the 2017 GOP tax law, an individual could pass on up to $5.45 million without paying the estate tax, which would then take a cut of up to 40 percent from wealth above that threshold. The law doubled that minimum, exempting all estates worth less than $11.2 million. Couples filing jointly can now pass on more than $22.4 million before the tax sets in.
The estate tax is projected to account for about 0.6 percent of the federal budget in 2018, down from more than 1 percent in the 2000s, according to the Joint Committee on Taxation.
But that could easily change, if the federal government decides to revisit the “It still brings in some money and there’s still some real money there,” said Gleckman, of the Tax Policy Center. “The question is: ‘If you want to get money from rich people, is it better to have an estate tax or a wealth tax?’ “
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