Posted by: Heinz Brisske
Both Senator John Thune (R – S.D.) and Representative Kevin Brady (R – Texas) introduced bills to permanently get rid of the federal estate tax – or “death tax,” as Republicans have labeled it. The bills are almost identical to those introduced in the last Congress. Thune, who is on the Finance Committee, cited a study from the conservative economist, Douglas Holtz-Eakin to the effect that repealing the estate tx would create some 1.5 million new jobs.
Thune said in a statement that “This tax punishes farmers and entrpreneurs for a lifetime of hard work. Death should not be a taxable event, and I will continue to work in Congress to see a permanent end to this unfair tax.” He, of course, failed to mention that that estate tax currently only affects less than 1/% of the American population (only the very wealthiest among us). He also failed to cite a U.S,. government study that indicated that no farms nor small businesses had been lost as a result of the federal estate tax.
The current estate tax, in fact, exempts the first $5 million at death, and since it is indexed for inflation, the exemption in 2013 is $5.25 million, with an effective flat rate of 40% of amounts over that threshold.
President Obama has proposed reducing the exemption amount to $3.5 million, and raising the rate to 45%.
The Tax Policy Center has estimated that the indexed $5 million exemption will affect about 8,700 tax returns in 2013, while an exemption of $3.5 million would generate about 15,300 estate tax returns.
“What kind of government swoops in upon your death and takes nearly half of the nest egg you’ve spent your entire life building?” Brady said in a statement. Brady is a senior member of the House Ways and Means Committee.
It appears that the “permanent” estate tax legislation passed last year isn’t so permanent after all. Stay tuned.