There are plenty of losers in the tax reform plan being pushed by President Trump and his Republican compatriots. But one clear winner are the really, really rich. Nothing illustrates the wealthy’s hoped-for windfalls more than the proposed repeal of the estate or so-called death tax.
The estate tax is a tax paid by the decedents of those individuals who die with more than $5.5 million dollars of net worth. Because there is an unlimited deduction for wealth passing to a spouse, the tax tends to come due only after the death of the second spouse, when over $11 million can be passed to the kids, tax-free. This applies to 0.2% of decedents every year.
Or so the law states.
But one thing about a death tax is that the truly rich people can see it coming. If they cannot, they can be made to see it by advisers eager to help them for a fee. The death tax is so riddled with avoidance opportunities that it has long been called a “voluntary tax.” To illustrate, Sheldon Adelson, the casino owner -- and major donor to Trump and the Republican tax cutting crowd -- was able to get nearly $8 billion (that is, $8,000,000,000, which is a lot more than $5,500,000) to his children, tax-free, from 2010-2013 alone. (Adelson has no doubt gotten even more out of his estate -- his net worth is now estimated at over $35 billion — we know about the $8 billion from a clever and dedicated financial reporter).
This is why Gary Cohn said that only “morons” pay the estate tax.
Who is Gary Cohn? A rich man, former president of Goldman Sachs, and presently chief economic adviser to President Trump: that is, the man principally in charge of pushing forward Trump’s great tax reform plan, featuring a repeal of the estate tax.
Estate tax repeal is slotted to cost $269 billion over a decade, the metric for evaluating government fiscal plans these days. The recently passed budget allows Congress to “spend” an extra 1.5 trillion on tax cuts, adding to the already massive federal deficit and crippling government for years to come. But that’s not enough for the billionaires in power these days. Much of the mainly behind-closed-doors politicking about tax has been about trying to find measures to raise revenue so that Republicans can do what they have been promising -- including repealing the estate tax. Ideas include cutting back on retirement plan benefits for the middle class or repealing state and local tax deductions. Cohn himself has floated the idea of raising the gasoline tax, supposedly to pay for infrastructure. But not repealing the estate tax would pay for some needed improvements, too, and would make these middle class tax increases unnecessary. One analysis shows that the cost of repealing the estate tax would be enough to buy every American a pony.
Is this is what things have come to? President Trump and a Republican led Congress are scouring the fiscal landscape to raise funds to finance a tax cut for multi-millionaire morons who don’t want to be bothered avoiding the tax by perfectly legal means. Really?
We at the People’s Tax Page are trying to educate the people about the tricks that politicians play with taxes -- with, that is, the people’s money. Come visit us to see our videos, like those below, and other content, and help us to help educate the people on what is really going on.