Gallup: Most Americans Side With Trump, Cruz To Ditch The Estate Tax
Most Americans side with Republican presidential candidates, saying they would ditch the federal estate tax, according to a new Gallup poll on reactions to the candidates’ tax proposals. When asked about the proposal to “eliminate the estate tax that is paid when a person dies,” 54% agreed, only 19% disagreed, and 26% said they didn’t know enough to have an opinion.
Yet, the other proposal to get majority support in the Gallup poll was Trump’s proposal to “eliminate most federal income tax deductions and loopholes available to the very rich.” For that one, 63% of Americans agreed, 17% disagreed, and 19% said they didn’t know enough to have an opinion.
Do Americans need an estate tax refresher? Eliminating the estate tax would help the rich—the very rich. Only estates larger than $5.45 million potentially owe estate tax in 2016. A married couple, with a little bit of planning, can shield double that or $10.9 million.
Presidential candidates Donald Trump, Ted Cruz, and John Kasich all propose eliminating the federal estate tax—it’s the Republican party line. The estate tax is unfair; repealing it would spur job growth and grow the economy, they argue. (Ohio repealed its state estate tax under Gov. Kasich in 2010; for an interactive map showing the 18 states plus the District of Columbia that impose state estate or inheritance taxes or both, seeWhere Not To Die In 2016).
The Democratic candidates, by contrast, propose strengthening the federal estate tax, by lowering the estate tax exemption amount. (The lower the exemption amount, the more people pay). The estate tax proponents argue that the $250 billion-plus it would bring in over the next 10 years is crucially needed revenue, and that the estate tax is necessary to mitigate the concentration of inherited wealth.
This Tax Policy Center chart shows how the estate tax is a progressive tax, hitting taxpayers in the top income levels.
Hillary Clinton’s tax plan would bring back the 2009 estate tax exemption of $3.5 million per person and raise the top rate to 45% from the current 40%. Bernie Sanders would go farther; his plan calls for a $3.5 million per person exemption and a top rate of 65%. When he introduced legislation last summer to this effect, theResponsible Estate Tax Act, he called it “the mostsignificant moral issue of our time.” Still just 3 out of every 1,000 people who die would be subject to estate tax under the Democrats’ proposals, compared to 2 out of 1,000 now.
The House of Representatives passed an estate tax repeal bill last April, and this week anti-death tax groups called on the Senate in this letter to bring the House-passed bill to the floor for a vote. Call it election year posturing—as President Barack Obama would most definitely veto it (Former President Bill Clinton vetoed death tax repeal twice). Obama’s fiscal year 2017 budget echoes Hillary Clinton’s stance. “We’d like to get the issue as far along as possible under this administration,” says Palmer Schoening, chairman of the Family Business Coalition. “An incoming Republican president is going to want to do what is set by the Republican Congress; it’s important to keep this as a top tier issue.”
There’s talk and legislation at the state level as well. The tally of death tax jurisdictions dropped by one for 2016 as Tennessee’s inheritance tax repeal went into effect Jan. 1. Kentucky’s new Republican Governor Matt Bevin called for repealing the state’s inheritance tax in his January budget address. Republican Governor Paul LePage wants to repeal Maine’s estate tax (the exemption was bumped up to $5.45 million this year). Meanwhile negotiations continue in New Jersey, which has an estate tax with an exemption of just $675,000—the lowest in the nation—and a separate inheritance tax–in a deal that could link gas tax hikes to softening the estate tax by gradually raising the exemption amount to match the federal exemption. That would leave the inheritance tax–which hits non-direct heirs like brothers, sisters, nephews and nieces, and brings in more revenue—intact. A niece, for example, would owe inheritance tax at a rate of 15% to 16% after an exemption of just $500. “Some family members are arbitrarily taxed, others aren’t,” says Susan Barbey, who has mounted an unrelenting one-woman crusade against New Jersey’s inheritance tax. “This tax must be repealed.”
