Why Do Republicans Want to Repeal the Estate Tax?
The Republican-controlled House has accomplished one of its longtime goals by voting to repeal the estate tax last week. The vote was obviously partisan, with only seven Democrats voting to repeal the estate tax and three Republicans voting against it. But why are Republicans so adamant to repeal the tax?
Protecting the wealthy
Democrats main criticism of repealing the estate tax is that it seems to fall in line with stereotypical Republican policies that protect the rich. The estate tax only applies to the wealthiest 0.2% of Americans, according to the Center on Budget and Policy Priorities. Only two out of every 1,000 people who die will owe any estate tax. According to the Washington Post, the first $5.43 million of any estate is exempt from taxes. (And for couples, it’s the first $10.86 million.)
Once an estate is larger than that though, it is taxed at a rate of 40%, racking up a lot of money for the federal government. Repealing the estate tax would increase the deficit by $269 billion over a decade, according to The Hill. The estate tax will affect 5,400 estates in 2015, projects the Joint Committee on Taxation.
The morality of taxes
Republicans are playing emotionally when appealing for support to repeal the tax, arguing that it doesn’t only come after the wealthy, but rather affects small businesses and farms. According to Majority Whip Steve Scalise (R-La.), “the vast majority of our members in the Republican conference have never had the opportunity to stand up for small businesses who are threatened by the death tax everyday.”
“Can you imagine working your whole life to build up a family-owned business or a farm, and then upon your death, Uncle Sam swoops in and takes nearly half of what you spent a lifetime building up for your children and grandchildren?” said Rep. Kevin Brady (R-Texas), the bill’s sponsor.
Truly that sounds bad, but the U.S. Department of Agriculture estimates only 0.6% of farms have to pay an estate tax. The Washington Post also asked the office of Sen. John Thune (R-S.D.), who is sponsoring of the Senate version of repeal, about the farms, and “Thune’s staff conceded that they could not identify a single farm that had been sold because of the estate tax, but they said some farms had to sell acreage in order to pay the tax.”
Though Republicans are rejoicing, the bill may not make it much further, as the bill might not have the votes to get through the Senate, and the White House will most likely veto the measure.