Will Senate Democrats Really Cut the Death Tax?
One of the most significant votes in the recent Senate budget vote-o-rama was on the federal death tax. Not the disappointingly predictable vote on full repeal, which just two Democrats supported, but the vote on an amendment offered by Senator Mark Warner of Virginia that created a deficit-neutral reserve fund for “the repeal or reduction of the estate tax.” It racked up 80 votes, including 35 Democrats. Zero Republicans and just 19 Democrats voted no. So the Senate has voted overwhelmingly to at least reduce the death tax. Good. It really should be fully repealed.
The federal death tax snapped back into effect in 2011 after one year of full repeal in 2010. For two years the tax was set at a 35 percent rate, with a looming automatic hike to 55 percent in the fiscal cliff. Now, as part of the deal negotiated by Senator Mitch McConnell and Vice President Joe Biden, the death tax is permanently set at 40 percent, empowering the IRS to take nearly half of everything some Americans leave to their loved ones. Would 55 percent have been worse? Yes. But a seizure of 40 of your assets at death is still wrong.
It’s wrong because people work a whole lifetime paying taxes every step of the way. The death tax is an unfair double tax. It’s wrong because rather than taxing income it confiscates assets, directly reducing the country’s capital stock and therefore destroying jobs with a viciousness unmatched by other taxes.
It’s wrong because many family farms and businesses are worth millions according to the IRS – but only if they are liquidated; they are land-rich but cash-poor.
Across the Corn Belt, cropland prices increased an average of 20 percent from 2011 to 2012, according to the USDA, but 92 percent of all farms see less than $250,000 in annual sales to keep their farms operating.
The economic damage created by the current regime of IRS confiscation of 40 percent of everything above $5 million is staggering. According to an analysis by former Congressional Budget Office Director Douglas Holtz-Eakin conducted in 2010, when the death tax was zero, a 40 percent tax destroys 978,600 family business jobs.
It is the “worst tax — that is, the least fair” according to polling by the Tax Foundation. The most comprehensive review of public opinion on the issue by two liberal Yale professors, Mayling Birney and Ian Shapiro, found: “Many polls since the late 1990s have shown widespread public support for estate tax repeal, in the range of 60, 70 or 80 percent. Moreover, supporters appear to be spread more or less equally across income groups, contrary to what self-interest would predict.”
Which brings us back to that lopsided 80 to 19 Senate vote for “repeal or reduction.”
Do the 35 Democrats who voted for the amendment have any sincere desire to reduce the hated tax, or do they only want to inoculate themselves from the political consequences of opposing repeal?
There is an easy test. Where is the Democratic bill? What do they actually support? Republicans, like the American people, overwhelmingly support full repeal. (That was the other budget vote, on John Thune’s amendment. Only Susan Collins voted no among Senate Republicans.)
If the Democrats who voted for “repeal or reduction” don’t introduce and pass a bill actually following through on a position supposedly supported by 80 percent of the Senate, then we can safely assume they were simply politically posturing and are perfectly content to allow the tax to remain at its present confiscatory level. That’s wrong.
1) Our own government chides those of us who pay taxes for being greedy because we don’t want to give the politicians even more of our money to do things...Read More
In the last several weeks, I’ve heard people confidently declare that the 70 percent of Jewish Americans who voted for
I’m not much of a whiner, nor am I someone who makes predictions. I’d hoped for a Romney victory, though
With the first of three Presidential General Election debates having taken place last night, it seems like a good time