"260 Candidates Sign Pledge To Repeal Tax That Affects Only The Richest 0.6 Percent Of Estates"
Last week, the Wall Street Journal noted that more than 250 current congressional candidates have signed a pledge to support elimination of the estate tax (which is levied on inheritance). 253 Republicans and 2 Democrats joined the repeal pledge, which is being circulated by the American Family Business Institute, an organization that also funds right-wing attacks on the estate tax.
Due to a Bush-era budgeting gimmick, there is no estate tax this year, but President Obama has proposed permanently setting it at the 2009 level of 45 percent with a $3.5 million exemption (which means the first $3.5 million is passed on entirely tax free). Conservatives, when not pushing for outright repeal, have coalesced around a plan put forth by Sens. Jon Kyl (R-AZ) and Blanche Lincoln (D-AR) that would cut the rate to 35 percent and raise the exemption to $5 million.
The common right-wing refrain when it comes to the estate tax is that it decimates scores of small businesses and family farms, preventing them from being passed on to the next generation. But as a new report from Citizens for Tax Justice points out, at the 2008 level (which is lower than the level Obama has proposed), just 0.6 percent of deaths resulted in any estate tax liability at all:
New data from the IRS show that only 0.6 percent of deaths in the U.S. in 2008 resulted in estate tax liability in 2009. (Estate taxes are usually filed during the year after the year in which a person dies.) The estate tax that would exist under President Obama’s tax plan would affect even fewer estates, which demonstrates why Congress should consider enacting a more robust estate tax than what President Obama proposes.
As CTJ put it, “one of the strangest things about politics in our nation’s capital is that the taxes that get attacked the most by lawmakers are those taxes which affect the fewest, and the richest, people.” Indeed, the data confirms that there is certainly no case for making the estate tax any lower than it was in 2009, and plenty of reasons to increase rates on some estates.
If it were permanently set at the the 2009 level, 62.5 percent of estate tax revenue would come from estates worth more than $20 million, according to the Center on Budget and Policy Priorities. Another 35 percent of the revenue would come from estates worth between $5 million and $20 million. Repealing the tax, meanwhile, would cost $784 billion over the next ten years.
CTJ endorsed the estate tax plan put forth by Sen. Bernie Sanders (I-VT), which would create a more progressive estate tax, with higher marginal rates at $10 million and $50 million and a “billionaires surtax.” This kind of move makes sense, as income inequality in the country is the worst its been since 1928 and the richest households have been taking in a bigger and bigger share of the country’s total income.