CHN: House Bill Repeals the Estate Tax

Just three weeks after the House passed a Budget Resolution (H. Con. Res. 27) with devastating cuts to low-income programs, it passed a repeal of the estate tax that is a giveaway to the very wealthy. The bill (H.R. 1105) repeals the estate and generation-skipping transfer taxes for all estates. The vote was 240-179 with seven Democrats [Ashford (NE), Bishop (GA), Costa (CA), Cuellar (TX), Peterson (MN), Ruppersberger (MD), and Sinema (AZ)] joining almost all Republicans in support of passage, and three Republicans [Jolly (FL), Jones (NC) and Rigell (VA)] joining most of the Democrats in opposing the bill.
In 2015, there is already an exemption of $5.4 million on estates for a single owner (nearly $11 million for a couple). H.R. 1105 would lose $269 billion in revenue over 10 years. In the name of deficit reduction, the House budget would cut $5.3 trillion over 10 years with 69 percent coming from low- and moderate-income programs including Medicaid, CHIP (Children’s Health Insurance Program), SNAP, disability insurance, child nutrition, and the refundable Earned Income Tax Credit and Child Tax Credit. These actions by the House represent policies that, if enacted, would add to the enormous and growing wealth gap in our country. Advocates opposed the repeal via a group organization letter, individual organization letters, and individual personal emails to Representatives.

According to the congressional nonpartisan Joint Committee on Taxation, only 0.2 percent of estates – 2 out of every 1,000 or about 5,400 total – are subject to the estate tax. Proponents of eliminating the estate tax often cite the burden it places on small farms and small businesses. According to a recent report, in 2013 only 20 small business and small farm estates owed any estate tax and paid an average rate of 4.9 percent of their value. Proponents of repeal further argue that the estate tax is a form of double taxation. In reality, a significant portion of assets held by estates consist of unrealized capital gains that have never been taxed.

The Senate does not currently have plans to vote on estate tax repeal. During consideration of the Budget Resolution (S. Con. Res. 11) in the Senate, an amendment sponsored by Sen. John Thune (R-SD) allowing for the permanent elimination of the federal estate tax failed 54-46 (60 votes were required for passage). All but one Democrat and Sen. Susan Collins (R-ME) voted ‘no’ and all Republicans except Collins plus Sen. Joe Manchin (D-VA) voted ‘yes’. For more information on the House’s action on the estate tax, see CHN’s blog, Voices for Human Needs.

tax policy