Republican Push for Death Tax Repeal Act: Aiming to Eliminate Federal Inheritance Tax

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Republicans launch a fierce campaign to eliminate the federal inheritance tax, dubbing it the “Death Tax Repeal Act.”

Key Takeaways

  • Over 170 House Republicans and 44 Senators are backing legislation to repeal the federal estate tax.
  • The current estate tax affects estates worth $13.9 million or more, but this threshold could drop to $7 million if 2017 tax cuts expire.
  • Republicans argue the tax unfairly burdens family farms and small businesses, describing it as “double taxation.”
  • The proposed bill aims to completely abolish the estate tax and the Generation-Skipping Transfer Tax.
  • Critics point out that the tax only affects a small fraction of wealthy estates.

Republican Lawmakers Unite to Repeal “Death Tax”

In a strong show of unity, Republican lawmakers are pushing forward with legislation aimed at repealing the federal inheritance tax, commonly referred to as the “death tax.” Representative Randy Feenstra of Iowa is spearheading the “Death Tax Repeal Act” in the House, with backing from over 170 fellow Republicans, including Ways & Means Chairman Jason Smith. This move aligns with a parallel effort in the Senate, led by Majority Leader John Thune of South Dakota, supported by 44 senators.

The estate tax, which currently applies to estates valued at approximately $13.9 million or more, has long been a target of conservative criticism. Republicans argue that this tax places an undue financial burden on grieving families, particularly those with small family-owned businesses and farms.

Preserving Family Legacies and Rural Economies

Proponents of the repeal emphasize the importance of preserving family businesses and agricultural traditions. They contend that the tax forces some families to sell portions of their businesses or farms to meet tax obligations, potentially disrupting long-standing family legacies and local economies.

“The death tax is an egregious double tax that unfairly targets American family farms and small businesses and directly threatens long-held farming traditions in rural Iowa and across the country. It is ridiculous that the federal government sends grieving families a massive tax bill when a loved one passes away.” – Rep. Randy Feenstra, R-Iowa

Senator John Thune echoes this sentiment, highlighting the vital role of family farms and ranches in rural communities and the broader economy. The proposed legislation aims to eliminate not only the Estate Tax but also the Generation-Skipping Transfer Tax (GSTT), while maintaining the step-up basis provision.

Timing and Tax Cut Extensions

This push for repeal comes at a critical juncture, as Republicans seek to extend the 2017 Tax Cuts and Jobs Act. A key provision of this act doubled the estate tax exemption, but it is set to expire in 2026. If these tax cuts are not extended, the estate tax would apply to estates worth around $7 million or more, potentially affecting a broader range of Americans.

“Family farms and ranches play a vital role in our economy and are the lifeblood of rural communities in South Dakota. Losing even one of them to the death tax is one too many. It’s time to put an end to this punishing, burdensome tax once and for all so that family farms, ranches and small businesses can grow and thrive without costly estate planning or massive tax burdens that can threaten their viability.” – Rep. Randy Feenstra, R-Iowa

House Ways & Means Committee Republicans have warned that if the tax cuts expire, American households could face tax increases of over 20%. This potential scenario adds urgency to the Republican effort to solidify and extend the tax reforms initiated in 2017.

Debate Over Economic Impact

While supporters of the repeal argue that it will protect family businesses and stimulate economic growth, critics point out that the current estate tax affects only a small fraction of the wealthiest estates. The debate continues over whether the benefits of repeal would primarily aid the ultra-wealthy or genuinely protect small businesses and family farms as claimed.

As the legislative process unfolds, the “Death Tax Repeal Act” remains a focal point of Republican tax policy, reflecting broader ideological debates about taxation, wealth transfer, and economic fairness in America. The outcome of this push could have significant implications for estate planning, generational wealth transfer, and the overall tax landscape in the United States.

Sources:

  1. Inheritance tax hits chopping block as more than 200 Republicans push for repeal
  2. Cotton, Boozman, Thune Reintroduce Legislation to Repeal the Federal Death Tax
  3. Inheritance tax hits chopping block as more than 200 Republicans push for repeal

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