Trump-GOP tax plan: The estate tax may soon disappear
President Donald Trump is expected to unveil his signature tax reform blueprint on Wednesday and details are already starting to emerge about which tax rates could be cut back as well as the possible elimination of some of the more controversial deductions, including the eradication of the estate tax, FOX Business has learned.
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Since the start of his administration, Trump has been considering moving forward with eliminating the estate tax – also known in Republican circles as the “death tax” – and according to those familiar with the matter, his request could be granted as part of this week’s larger tax reform outline.
Those same sources confirm to FOX Business other details expected to be revealed this week include cutting the corporate rate from 35% to 20%, reducing the top income rate from 39% to 35% and breaking down the seven income tax brackets from seven to three.
A White House spokeswoman declined to comment at the time of publication.
The federal estate tax is a tax on property including real estate, cash and stocks, that is transferred from deceased persons to their heirs. The catch is only the wealthiest estates in the United States pay the tax because it’s levied against those whose total estate exceeds a certain exemption level.
According to the Joint Committee on Taxation, 99.8% of estates owe no estate tax at all, leaving the estates of 0.2% of the wealthiest Americans to pay up.
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Since the Internal Revenue Service (IRS) has an exemption limit of $5.49 million per person, according to the Center on Budget and Policy Priorities, an estate worth approximately $6 million would be required to pay a tax of, at most, $510,000. In other words, the wealthiest taxpayers owe a small amount of their estate’s value to the government if it exceeds the federal exemption requirements.
Even though the “death tax” may impact a minority of Americans, Trump is still determined to eliminate that which he called a “tremendous burden” at a recent rally in North Dakota.
“We’ll also protect small businesses and family farmers here in North Dakota and across the country by ending the death tax,” Trump said. “Tremendous burden for the family farmer, tremendous burden. We are not going to allow the death tax or the inheritance tax or the whatever-you-want-to-call-it to crush the American Dream,” he added.
In a sign a move like this could cause havoc within Democratic congressional ranks, Senate Minority Leader Chuck Schumer (D-NY) responded to Trump readdressing the elimination of the estate tax in a conference call with reporters a week after his rally in North Dakota.
''Repealing this tax is not a tax cut for the middle class,'' Schumer said. ''It's a tax cut for the wealthy elites in this country the president promised to stand up to,” Schumer then said.
Mark Mazur, director at the Tax Policy Center, tells FOX Business he agrees with Schumer that eliminating the estate tax would only help the wealthiest of Americans.
“There’s been a big push for over a decade to kill this off as way to mainly help well off individuals. Look at it like this: if the estate tax is no more, then a couple worth $10.9 million sees no change at all, a couple [worth] just over $11 million would see a little change and a couple worth $100 million would see a huge difference,” Mazur said.
Still, free market economists such as Art Laffer disagree and believe it should be repealed immediately. “It is the most immoral offensive major tax I know because you can earn your income fair and square and pay your taxes and you can take what you made off your taxes to Las Vegas and gamble,” Laffer said.
“As far as my federal government is concerned, it’s my money you rat. If you take that same money and give it to your kids, they will then tax you for it. It’s the most immoral tax I’ve ever seen. The reason I work and create an estate is for my kids. It absolutely kills off growth and it’s a terrible tax,” the former Reagan economic adviser explained.