- Michael D. Pitman Staff Writer
Thursday’s withdrawal of an Obama-era estate tax rule began when a Springfield business owner questioned it to Congressman Warren Davidson after reading about it in the Wall Street Journal.
That’s when Davidson, R-Troy, who represents the 8th Congressional District that includes Butler, Clark, Darke Mercer, Miami and Preble counties, told him, “Let’s follow up with this.”
After a couple attempts at passing bills to repeal the increase of the estate tax hike, language from Davidson’s bill he introduced in January made its way into the House appropriations bill passed last month. Then this week the U.S. Department of Treasury said it would withdraw those very regulations passed under the Obama Administration that would have increased the tax, commonly known as the death tax, by 30 percent.
But halting the increases in the death tax isn’t enough for Republicans, including President Donald Trump and leaders in the House and Senate. They want to kill the death tax. So does Davidson.
“There is a broader fight ahead as I hope Congress fully repeals the death tax in upcoming tax reform legislation,” he said.
The death tax is a tax on transferred property, stock, cash and other assets to a deceased person’s heirs, which estates over $5.49 million ($10.98 million for married couples) are taxed up to 40 percent. The Center on Budget and Policy Priorities reports that 99.8 percent of estates owe no estate tax.
“Roughly two out of every 1,000 people who die owe any estate tax,” according to the center. “This is because of the tax’s high exemption amount.”
That exemption amount went from $650,000 per person in 2001 to $5.49 million per person in 2017.
The center also reports that many avoid paying the estate tax because of “large loopholes,” such as the grantor retained annuity trusts (GRAT). Bloomberg News reported that according to attorney Richard Covey, the federal government has likely lost out on more than $100 billion since 2000 because of tax shelters like GRAT.
Davidson initially introduced the legislation in 2016 to stop the death tax increase. He says the Obama-era tax increase “violates” the congressional authority to have the power to stop and collect taxes, and the separation of powers “by unilaterally changing well-established tax law and practice and rejecting the clear will of Congress.”
Beyond that, he said it was “simply bad policy which will remove billions of dollars invested into our economy.”
“Family businesses are the bedrock of our economy,” Davidson said. “Future prosperity in America depends on smart and timely, pro-growth policies.”
And many Republicans, such as U.S. Speaker Paul Ryan, R-Wisconsin, say that just repealing the death tax will help Middle Class Americans while Democrats say just the opposite. U.S. Rep. Emanuel Cleaver, D-Missouri, called the GOP repeal initiative “reverse Robin Hood-ism at its best,” according to the Hill.
Billionaire Warren Buffett told CNBC earlier this week that a repeal on the estate tax would be “a terrible mistake” and could lead to dynasty-building.
But there is another hurdle for the GOP in the Senate as they work to repeal the death tax. While GOP Senate leaders are working to repeal the tax, Sens. Mike Rounds, R-South Dakota, and Susan Collins, R-Maine, have said killing the death tax needs to be compared to other priorities, such as tax cuts, according to the Wall Street Journal and other media reports. Both are reported to be against the repeal.View full experience