“Death will no longer be a taxable event in America,” Vice President Mike Pence said before reminding his audience of autoworkers that the administration’s tax plan’s top priority was the working class.
That’s a bit like telling people that a key piece of your plan to end homelessness is building more luxury condos.
Unlike the income tax, the estate tax is a levy on wealth – more specifically, wealth that’s about to be passed on to the next generation, not to a surviving spouse or to charity. But the estate tax doesn’t trifle with modest estates. The first $5.5 million per individual or $11 million per couple is exempt (with annual increases for inflation). Taxpayers can also avoid the estate tax by giving money and assets away before they die, with a total of up to $5.5 million being exempt.
As a consequence, the vast majority of American families aren’t touched by the tax; according to the congressional Joint Committee on Taxation, only 0.2 percent of U.S. estates were expected to pay it in 2017.
And thanks to an array of exemptions and loopholes, even the estates that were hit by the levy paid only 17 percent of their value to the Treasury on average – far below the 40 percent statutory tax rate.
If anything, ending the estate tax increases the tax burden on working families by lifting some of the load off the wealthiest ones. But that’s just another detail about the Republican tax plan that top Republicans aren’t touting.
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