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Estate Tax Repeal Vote Divides Republicans and Democrats as IRS Deadline Looms

Strategic Insights

— 1 min read

With the IRS filing deadline approaching, the House is gearing up to vote on repealing the estate tax, an issue that has galvanized both parties. Republicans see the vote as a way to showcase their commitment to reducing taxes, while Democrats are eager to debate a proposal that would add $270 billion to the federal debt over a decade. The vote is unlikely to pass in the Senate, but both parties are using the issue to demonstrate their stance on tax policy ahead of the 2016 campaign.

Key Takeaways:

  • The House is set to vote on repealing the estate tax, with Republicans arguing that it's "morally wrong" for families to have to deal with taxes after a loved one's death.
  • The proposal would add $270 billion to the federal debt over a decade, according to the Congressional Budget Office.
  • Only 54 senators backed a nonbinding repeal proposal last month, six short of the 60 votes needed for legislation to move forward.
  • The estate tax affects only a small fraction of estates in the U.S., with the Joint Committee on Taxation estimating that 5,400 estates will have to deal with the tax over the next several years.
  • Individuals with estates valued at less than $5.43 million (single filers) or $10.86 million (married couples) are exempt from the tax.
  • The 2013 "fiscal cliff" deal set the current parameters for the estate tax, including a 40 percent rate and linking the exemption parameters to inflation.
  • Democrats and Republicans are using the issue to demonstrate their stance on tax policy ahead of the 2016 campaign, with the White House threatening to veto the House measure.
  • The proposal would also save heirs from capital gains taxes on their relative's assets, with Republicans arguing that this would help small businesses and family farms.
  • The Joint Committee on Taxation estimates that 5,400 estates will have to deal with the estate tax over the next several years.
  • Individuals with estates valued at less than $5.43 million (single filers) or $10.86 million (married couples) are exempt from the tax.
  • The proposal would add $270 billion to the federal debt over a decade, according to the Congressional Budget Office.
  • The estate tax affects only a small fraction of estates in the U.S.

Sources:

  • "House GOP to vote Thursday to repeal estate tax" by Bernie Becker GREG NASH
  • Congressional Budget Office
  • Joint Committee on Taxation

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