by: Jordan Silverman — ASSET
WASHINGTON, D.C. – On March 25, the House Committee on Ways and Means conducted a markup session on eight bills, including the “Death Tax Repeal Act of 2015” (H.R. 1105) that was introduced by Rep. Kevin Brady (R-TX). The central focus on this markup session in particular was the estate tax. This was made evident when Chairman Paul Ryan (R-WI) made his opening remarks exclaiming that they were there to repeal the death tax. He then proceeded to speed through the first seven bills on the docket so quickly I almost didn’t catch the name of the bills that were being discussed.
When it came time to markup Rep. Brady’s bill on estate tax repeal, the stage had been set for a somewhat heated debate across the aisle. The arguments being made on the left side of the aisle were, as expected, focused on the loss of potential revenue from repealing the estate tax – a reported $269 billion over the next 10 years – that could be put to good use. Another strong point made by the left side of the aisle was that on a yearly basis only about 5,500 households would be affected by the estate tax and the tax only affected the ultra-rich in the U.S.
However, the Republicans on the Committee rightly pointed out that that the ultra-rich are privy to a series of estate planning strategies exclusively available to people in their financial position. These strategies, such as putting assets in a dynasty trust, are implemented to avoid paying the estate tax upon one’s death. Instead of having billions of dollars tied up in unproductive trusts, wouldn’t it be better to have these funds reinvested in U.S. businesses to spur job growth?
This sentiment was echoed on the right side of the aisle in addition to the fact that the estate tax adversely affected minority- and women-owned businesses. A 2004 study conducted by two Boston College Professors showed that by 2055 the estate tax will have confiscated 10-13% of all African-American wealth and The National Black Chamber of Commerce (NBCC) recently issued a letter of support for Rep. Brady’s bill.
After the debate wound down, Chairman Ryan issued a roll-call vote for the bill and with a 22-10 tally, the “Death Tax Repeal Act of 2015” received a favorable report by the House Committee on Ways and Means and will move onto the House floor in the coming weeks.
Though the bill will likely pass the House due to an overwhelming Republican majority, the true challenge will be garnering enough Democratic support in the Senate to send the bill to President Obama’s desk. Obama has already issued a veto threat on this bill and proposed his own estate tax changes that could raise the estate tax in the U.S. to the highest in the industrialized world. So, unless a veto-proof majority in the Senate is established, the bill seems destined to fail.
Meanwhile, ASSET continues to gather support on both sides of the aisle for a reintroduction of the ‘ASSET Act’ (H.R. 5872) which was introduced by Rep. Andy Harris (R-MD) and referred to the House Ways and Means Committee in December, 2014. The ASSET Act would provide a voluntary, simplified method for Americans who face estate taxes to pay a fair share of taxes while they are alive, without any of the distortive, inefficient effects created by the current method of collecting the estate tax.
If enacted, the ASSET Act is designated to be revenue-neutral, thereby avoiding the fallout of a reported loss of $269 billion over the next 10 years that would come with a full repeal of the estate tax. ASSET will continue to fight for a simplification of the estate tax collection method and looks to reintroduce the ASSET Act in the 114th Congress as an alternative to the narrative of full repeal versus Obama’s increased estate tax.