For all that’s made of Donald Trump’s antagonistic relationship with the GOP establishment, the president showed Wednesday he’s willing to borrow from their playbook when it suits him.
“To protect millions of small businesses and the American farmer, we are finally ending the crushing, the horrible, the unfair estate tax, or as it is often referred to, the death tax,” Trump said Wednesday in Indianapolis. “Your family won’t have to run out and do a fire sale to try to get the money to pay the tax, lose the business, ends up going out of business, all of those jobs are lost. The farmers in particular are affected. They have wonderful farms but they can’t pay the tax, so they have to sell the farm.”
Republicans have pretended for decades that the taxes assessed on extremely wealthy people’s fortunes when they die are a cruel raid on farm country. The optics of GOP politicking against the estate tax system have always played on the image of a leathery farmhand who sweated for decades to leave his children better off only to have the evil taxman swoop in before his body’s even cold. When President Bill Clinton was closing out his second term, estate tax opponents drove a copy of their repeal bill to him aboard a literal tractor.
This is, for lack of a better term, bullshit. Only a few thousand Americans will ever pay the “death tax.” All of them come from the absurdly wealthy cluster of the American public who are worth more on paper than tens of millions of people at the bottom end of the national income distribution. Half of the rare families worth enough to trigger the estate tax live in New York, California, Texas, Florida, or New Jersey. Almost none of them are farmers or small business owners. Nearly all of them are suit-wearing plutocrats from privileged enclaves.
Trump pretended otherwise in Wednesday’s speech. “Our framework includes an explicit commitment that tax reform will protect low-income and middle-income households, not the wealthy and well-connected,” he said. “They can call me all they want. It’s not going to help.”
Republicans want you to believe estate tax payers spent their lives in the dirt, when they were really miles above it stretching their legs in first class. The sheer industry the party puts into maintaining its false image of the estate tax battlefield belies the severity of the deception.
There are so few estate tax payers in some states that the Internal Revenue Service (IRS) won’t even publish the exact number for fear the families in question could be too easily identified by name. Seven states – with 14 Senators between them – fit this category.
In Indiana, there are just 70 estates large enough – worth more than $5.5 million for an individual or $11 million for a married couple – to pay even a penny of estate tax next year, according to the IRS figures. Yet that’s where Trump has gone to peddle the venerable lie that a tax targeting people like him – absurdly wealthy suit-wearing members of the coastal elite – is in fact a villainous sacking of the American heartland.
Wednesday’s face for the lie was an Indiana farmer named Kip Tom. American taxpayers have given Kip Tom at least $3.3 million in farm subsidy payments, according to the Environmental Working Group’s database on the crop supports and insurance systems designed to protect agricultural companies from the vicissitudes of the weather.
The Tom family’s 187-year legacy of farming in Indiana “could come to an end because of the death tax or the estate tax. And could make it impossible for him to pass that legacy to his wonderful family,” Trump said. “We are not going to let that happen. We are not going to allow the death tax to steal away the American dream from these great, great families.”
Tom follows where others have led. But while rich Republicans frequently treat farmers and ranchers as props for the cameras, as Institute for Policy Studies scholar Chuck Collins has documented, behind the scenes the opponents of the estate tax have flailed.
Part of the reason no one loses their family farm to the estate tax is that no one pays any estate tax on that first $5.5 million per person of heritable wealth. The graduated nature of the tax does not mean you pay 40 percent of everything you hand down the second that sum cracks the threshold. Families pay the 40 percent rate on every dollar above the cutoff.
If the estate tax doesn’t actually harm the people Republicans pretend it does, then repealing it would mean a windfall for the opposite type of economic character. The sums returned to absurdly wealthy families under the repeal Trump wants are staggering – as much as $20 million per family on average for the wealthiest cut of the pool in any given year, per the Joint Committee on Taxation. By 2028, repeal would have stripped about $270 billion out of the common pool of money the United States uses to buy itself things like school, tanks, and affordable housing.
If anything, the estate tax system needs to be strengthened so that it is harder for the hyper-wealthy to evade. The country would have had $100 billion more to spend on common goods from 2000 to 2013 were it not for the machinations of billionaires who use creative accounting to elude the law.
That’s approximately what it would cost to provide universal preschool coverage to every American child, sitting in elite bank accounts while working families struggle to afford basic child care.