Republicans Mock Rescue Plan While Pushing A Tax Cut For The Richest
The American Rescue Plan that Congress passed this week is a giveaway to people who don’t really need help, according to Republican lawmakers.
States are getting a “bailout” and parents will receive “sweeping new government benefits with no work requirements whatsoever,” as Senate Minority Leader Mitch McConnell (R-Ky.) put it on Thursday.
At the same time, Republicans say, America’s richest heirs need relief from estate taxes that might take a chunk out of their inheritance.
McConnell and half the Senate Republican Conference this week reintroduced their bill to repeal the estate tax, which applies to a portion of the estates of a tiny fraction of the very richest Americans after they die. Republicans already reduced the tax in the 2017 Tax Cuts and Jobs Act, but have continued to introduce symbolic bills in each new Congress that would fully repeal the tax.
It’s an odd message this week, with 10 million Americans still unemployed and millions more relying on ad hoc benefits that start and stop according to lawmakers’ whims, such as the federal unemployment programs that would expire this month if it weren’t for the American Rescue Plan.
Sen. John Thune (R-S.D.), the lead sponsor of the estate tax repeal, called the pandemic relief bill “mostly just a collection of payoffs to Democrat interest groups and Democrat states,” echoing a general talking point offered by many other Republicans.
Fully repealing the estate tax would be the ultimate payoff for Republican donors and interest groups, even if it contradicts the GOP’s nascent effort to paint itself as the true party of the working class.
“It’s an issue that’s important in agriculture and supporting small businesses, and it affects a lot of jobs too,” Thune told HuffPost. “So, yeah, it’s a bill we’ve introduced every year. And there’s a very big constituency in my state for it.”
Only 1,900 estates were valuable enough to owe this tax in 2018, according to the Urban-Brookings Tax Policy Center. Over 90% of those estates came from the top 10% of income earners; almost half of the total tax paid came from the richest 0.1% of Americans.
The 2017 Tax Cuts and Jobs Act doubled the estate tax exemption to $11 million for individuals and $22 million for couples, meaning the government only taxes the portion of an estate above those amounts and lower-valued estates go tax-free. Families can also make deductions for things like charitable donations and gifts, to reduce the size of the estate before a 40% tax applies, and there are special provisions that allow farms and small firms to defer payment and use an installment plan.
Only 80 small farms and businesses had to pay the tax in 2017, according to the Tax Policy Center, and none have had to since the 2017 law took effect. After all, $11 million is not a small amount of money.
The U.S. Department of Agriculture’s Economic Research Service estimated that of more than 31,000 farm estates in 2020, only 0.16% would have to pay the estate tax. That’s about 50 farms.
“The $11 million [exemption] that we have covers probably 98% of estates,” Grassley said. “But the same principle applies if you’ve got a $10 million farm or if you’ve got a $100 million farm. You want to pass it on to the next generation.”
The agriculture industry generally dislikes the estate tax, with groups like the American Farm Bureau Federation endorsing repeal. The larger exemption is one of several income tax policies that Republicans set to expire in 2025, so the estate tax will automatically become more stringent if Congress doesn’t act before then.
Democrats favor reducing not only the estate tax exemption, but also new annual taxes on accumulated wealth, since the federal income tax only targets income.
“What a wonderful way for Democrats to continue to show the difference between Republican priorities and Democratic priorities,” Sen. Chris Murphy (D-Conn.) said. “Republicans are obsessive about delivering massive tax cuts to their super wealthy friends. Democrats just proved we were willing to go big in order to put money in the pockets of lower and middle-income Americans.”
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