Who’d Gain From an Estate Tax Rollback: The 0.2 Percenters
Supporters and critics of the Republican tax bills argue over their effect on middle-class Americans, but there is one group that everyone agrees would come out ahead: the millionaires and billionaires who have to reckon with the estate tax.
As Steven Mnuchin, President Trump’s Treasury secretary, bluntly declared last month, “Obviously, the estate tax, I will concede, disproportionately helps rich people.”
As it is now, the estate tax affects a small set of wealthy Americans, applying only when someone leaves assets worth more than $5.49 million to heirs. Together, parents can leave $11 million to their children without paying a penny in estate taxes.
Last year, for example, more than 2.6 million people died in the United States. Of the estates filed with the Internal Revenue Service, 5,219 — or 0.2 percent of the total — were large enough to qualify for the tax.
The kind of households that could potentially owe money, however, include Mr. Trump’s, Mr. Mnuchin’s, and those of several cabinet members and advisers, including Education Secretary Betsy DeVos, Commerce Secretary Wilbur Ross, Secretary of State Rex W. Tillerson, Transportation Secretary Elaine Chao, Agriculture Secretary Sonny Perdue, Housing Secretary Ben Carson and Gary Cohn, chief of the National Economic Council.
(An analysis by the left-leaning Center for American Progress Action Fund concluded that the estate tax repeal could save Mr. Trump’s estate more than $1 billion, and those of his cabinet members $3.5 billion.)
Mr. Trump has stated, incorrectly, that the tax is crushing “millions of small businesses and the American farmer.” In reality, only about 80 small businesses and farms would fall under the estate-tax tent this year, according to the nonpartisan Tax Policy Center.
Republicans want to shrink the numbers further. In the Senate’s proposed tax bill, exempted income would temporarily double to $11 million per person — $22 million for a couple — during the next decade.
If those rules had been imposed last year, the number of estates owing money under the tax would have been no more than 2,204 — fewer than 0.1 percent of the total.
The House bill approved Thursday goes a step further, doubling the exemption through the 2024 tax year (and indexing for inflation), but then eliminating the tax. The result is that other taxpayers would have to make up the $151 billion cost over the next decade.
Opponents of the tax say fairness is at stake. No one — including billionaires — should have their assets taxed twice, once in life and once in death, the argument goes. But the issue is less about double taxation than no taxation.
by Patricia Cohen, NYTimes.com, November 16, 2017
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Source: Time for Families
