Recently, Senator John Thune introduced legislation (again) to repeal the estate tax. The estate tax, which is one of the few safeguards left against dynastic wealth in this country, was last adjusted just 13 months ago to make it even more generous to the children of millionaires and billionaires. Now, the introduction of yet another estate tax repeal bill raises the question: can Republicans do anything besides push tax cuts for the wealthy?
In 2017, Republicans passed their massive tax overhaul which doubled the minimum value an estate must reach to be subject to the estate tax, changing the limit to $11.2 million for an individual and $22.4 million for a married couple. Because the 40% tax only applies to amounts above the threshold, this means that an heir can inherit a whopping $22,400,001 and owe only 40 cents in estate tax.
And yet, Senator Thune and friends would have us believe that the estate tax is unfair, which is quite a position to have when we’re talking about an average effective tax rate of 17% on millions of unearned dollars. Plus, at the estate tax’s current level, even after taxes the heirs are being gifted an amount of money so large they won’t ever need to work a day in their life, making this quite possibly the only taxable event they’ll ever have to see. The same can’t be said for working class Americans.
Despite a persistent smear campaign by the right on the so-called “death tax,” this cut to the estate tax is almost sure to be met with anger from most Americans, as it should. The majority of Americans agree that the wealthy should pay more in taxes. Eliminating the estate tax would be doing the opposite, and yet Senator Thune tries year after year to get it done. Perhaps there is a large South Dakotan constituency advocating for this tax cut for millionaires and billionaires that just wasn’t accounted for in the poll? Not likely.
With less than 0.2% of estates, or 5,400 people nationwide, paying the tax last year, it should surprise no one (except maybe Senator Thune) that South Dakota had only around 20 estates in 2018 that were subject to the estate tax (this year that 5,400 number is expected to drop as the Republican tax bill goes into effect, doubling the threshold). So, while it’s entirely possible that all 20 estates’ heirs called their senator and asked him to repeal the tax, that’s still just a tiny fragment of his 885,914 constituents. It’s altogether more likely that big donors have been applying pressure, and that Sen. Thune is more concerned with their policy preferences than the needs of average South Dakotans.
Senator Thune and his two cosponsors on this bill, Sen. McConnell and Sen. Grassley, are not alone, Their legislation simply continues the Republican party’s trend of pushing for tax cuts for the very wealthy and facilitating soaring wealth inequality. Instead of focusing on the stagnant middle class or the 19 million Americans living in poverty, they remain laser-focused on tax cuts for the wealthy. It’s a good thing not every representative is doing the same.
There are so many other pressing issues for Senator Thune and his colleagues to be working on that it appears tax cuts for the wealthy is almost an obsession of theirs. It’s time for Republicans to find something else to occupy their time– maybe the concerns of the middle class?
(Reposted with permission from PatrioticMillionaires.org)
Morris Pearl is a former managing director at BlackRock, Inc. and Chair of the Patriotic Millionaires, a coalition of high-net worth Americans concerned about the destabilizing concentration of wealth and power in the U.S.