It looks like the tax plan moving through Congress will not abolish the estate tax but instead double the wealth exempted by the tax. This is a victory for our Defend the Estate Tax campaign. But it is still ridiculous that Congress is putting a priority on doubling the wealth exempted by the estate tax from $11 million for a couple to $22 million.
The estate tax is our nation’s most progressive tax levy, paid exclusively by multi-millionaires and billionaires. Of the millions of Americans who die a year, 5,400 estates qualified for the estate tax in 2016. Less than 0.2% of Americans qualify for the estate tax, which works to limit how much inheritances contribute to the historic inequality present within the country.
The latest data available, from 2015, shows 4,918 households paid a total of $17.1 billion on their estates valued at $88.2 billion. With the deficit steadily increasing, it’s a surprise so many fiscal hawks are willing to forgo such a historic source of revenue. It’s even more curious just how rich the most outspoken opponents of the estate tax are.
Multimillionaire U.S. Senator Ted Cruz (R-TX) spoke negatively of the tax, calling it “antiquated,” despite it being frequently adjusted and lower now than it had been during Reagan’s administration. With approximately 340 Texas estates qualifying for the estate tax, it’s not hard to imagine that Cruz is more concerned with appeasing wealthy would-be donors than the nearly 28 million other citizens of the Lone Star State who benefit from estate tax revenue.
Many politicians see the estate tax as a bargaining chip, willing to leave it intact to appease holdouts in order to reconcile the senate and house GOP bills. This is political recklessness, and threatens to simultaneously increase economic inequality and the national deficit. Texas representatives might be willing to balloon the deficit by excluding billions of dollars in estate tax revenue, but the state with the largest number of estate tax qualifiers is not.
“If Donald Trump and congressional Republicans are hell-bent on cutting taxes for our wealthiest residents, we should counter-balance those tax cuts by recapturing the lost funds and investing them here at home in our schools, our healthcare system, and our roads and public transportation system,” said California state senator Scott Wiener (D-San Francisco), who recently introduced an estate tax bill in his state legislature.
Unsurprisingly, the Trump administration is trying to paint the estate tax as the bane of farmers and ranchers in an attempt to be the champion of the working class. This is propaganda in the simplest of terms, as less than 700 of estates qualifying for the estate tax reported having any farming equipment assets. This is only 13% of those that meet the estate tax threshold, and it still doesn’t mean that the farm was the primary or sole source of income.
One of the champions of estate tax repeal is South Dakota Rep. Kristi Noem. Her family paid an estate tax in 1994, making her the poster child of a ranching family subjected to the tax. But as my article in USA Today reveals, her story has a few important gaps. Her experience scarcely justifies eliminating a tax for multi-millionaires and billionaires.
With the facts plain and easily accessible, it leaves the Trump administration no other alternatives besides personal attacks on those qualified and willing to pay the estate tax. Gary Cohn, Director of the National Economic Council and chief economic advisor to Trump, called wealthy people who pay the estate tax “morons.” We like to think of ourselves as patriotic, more concerned with paying our fair share than investing energy in searching out loopholes.
Hopefully this tax bill will stall out in Congress. But if it passes, we should demand that the remaining estate tax law close the various loopholes that wealthy households use to avoid paying billions in taxes. Long live the estate tax!