Republican Push to Repeal Federal Inheritance Tax
Introduction
A significant Republican effort is underway to eliminate the federal inheritance tax, commonly referred to as the "death tax." Led by Rep. Randy Feenstra (R-IA), over 170 House Republicans have co-sponsored the Death Tax Repeal Act, supported by House Ways and Means Chairman Jason Smith (R-MO).
Background: The Federal Inheritance Tax
An inheritance tax, also known as an estate tax, is imposed on the value of assets inherited by beneficiaries upon a person’s death. Republican lawmakers have consistently denounced the estate tax as an unnecessary financial burden on grieving families, particularly impacting small, family-owned businesses.
Current Republican Efforts
The push to repeal the inheritance tax is part of the broader Republican agenda to extend President Donald Trump’s 2017 Tax Cuts and Jobs Act. Among the provisions expiring at the end of this year is a doubling of the estate tax exemption, which supporters of the tax argue is necessary to protect family farms and small businesses.
Arguments in Favor of Repeal
Proponents of the Inheritance Tax Repeal Act contend that:
- The tax is a "double tax" that unfairly targets American family farms and small businesses.
- It threatens long-held farming traditions in rural areas.
- The tax burdens family farms, ranches, and small businesses with costly estate planning or massive tax bills that jeopardize their viability.
Arguments Against Repeal
Supporters of the federal estate tax argue that:
- It affects a relatively small number of estates. Penalties are triggered for estates worth approximately $13.9 million or more.
- The revenue generated by the estate tax helps fund essential government programs.
Congressional Support
In addition to the House-sponsored bill, a counterpart bill in the Senate is being led by Majority Leader John Thune (R-SD) and backed by 44 senators. Both Feenstra and Thune have emphasized the unfair impact of the tax on family farms and small businesses in their home states of Iowa, South Dakota, and elsewhere.
Possible Consequences if Tax Cuts Expire
If Republicans fail to extend Trump’s tax cuts before the end of this year, the estate tax would affect any estates worth roughly $7 million or more. According to Modern Wealth Law, this would result in over 20% higher taxes for average American households.
Feenstra and Thune’s Bill
The Death Tax Repeal Act, if passed, would abolish the federal inheritance tax altogether, eliminating the financial burden it places on grieving families and family-owned businesses.
Conclusion
The Republican push to repeal the inheritance tax is a significant policy initiative that has the potential to significantly impact American family farms, small businesses, and the overall tax landscape. The debate over the merits of the tax is likely to continue as Congress considers the future of Trump’s tax cuts.
