The estate tax has amassed an increasing amount of media attention lately. This, in large part, is due to the deaths of celebrities such as Joan Rivers and Phillip Seymour Hoffman, both of whom had amassed multimillion dollar estates that are now subject to the tax. In non-celebrity news, the estate tax has become a hot button issue for U.S. legislators, regardless of party affiliation, who are honing in on a more comprehensive tax code overhaul.
On the one hand, a bill – H.R. 2429, the “Death Tax Repeal Act” – has been introduced to the House by Rep. Kevin Brady (R-TX) and has support from a majority of its members. The bill has 221 sponsors, which account for more than half of the entire House, and House Ways and Means Chairman, Dave Camp (R-MI) has endorsed having a vote on it this session. However, it does not appear likely that there will be a vote on this bill in the two months prior to the midterm elections.
Nevertheless, if the GOP were able to take control of the Senate and obtain a more commanding majority in the House, then it seems as though this bill would have a good chance of passing both sides. Additionally, Rep. Brady recently announced that he will seek the chairmanship of the House Ways and Means Committee against Rep. Paul Ryan (R-WI), who was expected to replace current chairman Dave Camp. Ways and Means handles all tax reform issues and if Brady were to ascend to the chairmanship, then estate tax repeal or reform may become a reality sooner than expected.
Now on the other hand, Sen. Bernie Sanders (I-VT) has called for a “progressive” estate tax on multi-millionaires and billionaires. Sanders’ proposal – S.2899 – takes aim at taxing the top .25% of Americans in an attempt to reduce income inequality alongside the national debt. Despite Sanders’ noble efforts, his proposal is unusually quiet on U.S. private sector job growth, which is the goal of tax reform more often than not. Sanders also mentioned closing estate tax loopholes that wealthy Americans have been exploiting, but does not mention how his plan would accomplish this. Much like Brady’s estate tax reform bill, Sanders’ bill does not seem likely to be acted upon before the midterm elections.
Along with these legislators, ASSET continues to encourage and advocate for federal estate tax reform. The ASSET solution may be seen as somewhat of a middle ground to the aforementioned bills being introduced since it is aimed at simplifying the collection method of the estate tax. It would eliminate death as a taxable event by allowing individuals to make somewhat of a down payment on their estate taxes during their earning years. This program would be completely voluntary and therefore would not involve a new tax being imposed by Congress. The ASSET solution has garnered significant bipartisan support.
Meanwhile, at the state level, more and more states continue to push to reform their estate tax. Earlier this year, Maryland and New York introduced and passed legislation that will raise the exemption level for the state estate tax to match the federal level over the next five years. There has also been a renewed effort to repeal the estate tax entirely in New Jersey. The estate tax is an important issue in determining where individuals and businesses decide to call home. It seems to be dawning on state legislators just how significant the impact of the estate tax is on individuals as well as businesses who would rather move than deal with the tax.
So what’s really new with the estate tax? Short answer: not much. The upcoming midterm elections seem as though they will decide the future of the federal estate tax and we will all know more once the final votes have been tallied.