What is the Death Tax?
The death tax is imposed on individuals trying to pass on their life savings to the next generation. The tax hurts those who are considered “asset-rich, but cash-poor.” For family businesses this creates a threat to the future of the business when Washington demands 40 percent as payment for the tax. Even before the owner passes, the estate tax creates a significant planning and mitigation burden on the family over the span of the owner’s life to keep the business intact when the tax bill comes due.
See how the death tax affects these family businesses
Quick facts about the Death Tax
Agree or Disagree? The death tax should be abolished.
A recent NPR/Ipsos poll conducted in April 2017 found 76% of respondents agreed with the statement “The death tax should be abolished.” When broken down by party affiliation, all three strongly supported repeal.
The death tax disproportionately hurts family farms.
Less than 1% of the US populations is made up of farmers, but the 13% of estates contain farm assets. The land rich but cash poor nature of farming makes it harder for farms to survive the death tax without taking out huge loans to pay the tax.
The once a generation timing of the death tax makes annual statistics misleading, by looking at a larger time frame we can see the true impact of the death tax on family businesses and farms.
More than 102,000 closely held businesses have been forced to pay the death tax since 1995.
More than 36,000 family farms have been forced to pay the death tax since 1995.
Death Tax Facts: Destroying Jobs and the American Dream
According to the Tax Foundation, repeal of the death tax will create nearly 160,000 jobs by allowing more capital to be invested in the economy.
Repealing the death tax will increase wages by $79 billion. For a family of four making $80,000, that is a $640 increase and an individual making $36,000 increases by $280.
The Joint Economic Committee found that the death tax has destroyed roughly $1.1 trillion in capital stock in the economy. Ending the Death Tax would add $119 billion to GDP.
In 2016 the Death Tax collected $18 billion, less than one percent of federal revenues. The Death Tax is one of the smallest sources of tax revenue for the federal government
Repealing the death tax will bring in nearly as much money as the current tax collects over 10 years from other tax sources including income and capital gains taxes.
Economists have found compliance and mitigation costs of the death tax are higher than the revenue it collects ($26 billion according to one study, compared to $18 billion in revenue).
According to Nobel Economist Joseph Stiglitz, the death tax increases income inequality by reducing incentives to save.
The death tax is consistently ranked as the least fair and most unpopular tax in America. Over 3/4 of Americans believe the death tax should be repealed.
America’s Death Tax is the fourth-highest. Russia, China, Canada, Mexico and Sweden are among the many nations which impose no Death Tax.
Democrats support protecting family businesses and workers from the negative effects of the death tax.
I am not one who says that [the estate tax] is a great thing and we must have it in place. In one particular area I think there is great resonance for eliminating this. That is, that any organic business–a farm, a small business, and frankly a large business–that would have to be broken up because of the extent of the tax should not be. A business is an ongoing organism. It employs sometimes 10 people and sometimes 10,000 people. To have to break that business up to pay any tax, to me, is counterproductive.
“I have made my decision on the upcoming estate tax repeal vote. I will cast my vote to end this tax, and I will do it [in] the name of issues that Democrats hold dear. Democrats believe in standing up for working families. No one will suffer more than the employees of family-owned companies in this state that will break up, or sell out to larger corporations, in order to satisfy their estate tax obligations.”
“It’s time we permanently repeal the tax on possessions that people leave to their children.”
“Even though paying down the national debt is one of my top priorities, I could not support an amendment that does not reflect my position of support for total repeal of the estate tax. I opposed this amendment because the revenue offset did not meet this criterion.”
“I believe we need to repeal the estate tax. It is bad for businesses. It’s bad for workers and new job creation. And it’s bad for our communities who are watching their local, family-owned businesses get swallowed up by large corporations.”
“Let me be clear. I am no fan of the estate tax. I understand how hard families work to provide opportunities and a better future for their children. Transferring assets from generation to generation motivates families to work even harder. It is unfair to place unreasonable burdens on small businesses and families seeking to provide for future generations.”
“I applaud lawmakers for repealing Virginia’s estate tax. This action protects family-owned small businesses and farms.”
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The Death Tax is killing family businesses
Help us kill this terrible tax once and for all!
