Rounds Admits Repealing Estate Tax Not Necessary

Pat Powers has been screaming about the estate tax (mistakenly propagandized as the “death tax”) for his GOP sponsors for quite some time. He is thus stung into confusion by the one South Dakota member of Congress who is not currently advertising on his blog, Senator Marion Michael Rounds, who admitted last week what we Democrats, some smart Republicans, and fact-based economists have been saying all along—repealing the estate tax is an unnecessary sop to a handful of rich people:

Sen. Rounds: my rich pals can already dodge the estate tax!
Sen. Rounds: my rich pals can already dodge the estate tax!

“I don’t think we have to totally repeal it because I think the folks on the upper end of it are all avoiding it right now legally anyway,” Mr. Rounds said Wednesday. “For me, we can’t fail on [a tax overhaul] and whatever we can do to pick up the last few votes we may need, I’m ready to negotiate.”

Under current law, the tax, with a top rate of 40%, applies to estates valued at more than $5.49 million per person or $10.98 million per married couple. Those levels are indexed to inflation under a deal Congress reached in 2010. The tax applies to about 5,500 estates a year.

According to IRS data, more than 40% of the estate tax in 2015 was paid by estates with gross values over $50 million [Richard Rubin, “Senate GOP Hits Resistance on Estate-Tax Repeal—from Republicans,” Dow Jones Newswires via Fox Business, 2017.10.05].

Apparently, we Obama Democrats have already helped make the estate tax rare:

…This year, 0.2% of people dying will have a taxable estate. Increases in the exemption under Presidents George W. Bush and Barack Obama made the tax less common. In 2008, 0.7% of the deceased had taxable estates; in 2000, 2.2% did.

“We’ve taken care of the problem for the vast majority of family-owned businesses or ranchers in this country,” Ms. Collins said. “So that is not a priority for me as we seek to craft this tax bill” [Rubin, 2017.10.05].

Jared Bernstein, VP Joe Biden’s chief economist, says repealing the estate tax blows another hole in the budget and gets us nothing but wider wealth inequality:

Given that reality, why kill the estate tax? It hits only the richest top 0.2 percent of estates and squanders $240 billion over 10 years for no known growth effects (the estate tax was temporarily eliminated in the 2001 tax cut, and analysts found zip in terms of growth impacts) [Jared Bernstein, “Psst… Hey, Republicans… Wanna See Some Payfors?Washington Post, 2017.10.05].

But Senator Rounds is still looking for a way to give some millionaires more gravy:

One way to address that concern, Mr. Rounds said, would be to double or triple the current exemption, setting it at $20 million or $30 million per couple.

“I would consider that a victory,” said Mr. Rounds, who helped remove tax reductions for high-income households from the Senate’s health care bill earlier this year over concerns about pairing tax cuts with Medicaid cuts [Rubin, 2017.10.05].

Rounds’s refutation of Republican estate-tax hysteria leaves Powers sputtering:

I believe Senator Rounds is trying to say that as part of tax reform, everything must be on the table and balanced against the greater good. But obviously, there’s some who disagree.

What are your thoughts? [Pat Powers, “Senator Mike Rounds comes out as saying ‘estate tax repeal isn’t necessary’,” Dakota War College, 2017.10.07].

My thoughts are that when Powers ends by asking your thoughts, he can’t critically evaluate disagreement among his party leaders, won’t risk taking a position that contradicts any Republican pooba, and will die before admitting that a Republican propaganda point he’s aped for years is bushwah that even his own Senator can no longer support.

6 Responses to Rounds Admits Repealing Estate Tax Not Necessary

  1. Look at the millionaires whining on the press release blog about fellow millionaire Rounds losing his resolve to eliminate a tax only paid by millionaires receiving free millions.

    I say eliminate the estate tax. Instead, charge beneficiaries income tax on the free money they’re being handed. It’s not double taxation because the lucky beneficiaries have never been taxed on what they are receiving. So let people who receive free money be taxed on that money just as lottery winners are taxed on their winnings, and just like working people are taxed on their earnings.

  2. Rounds tips his hand at how much he is worth and by God those little people who paid me this are not gonna get their greedy little hands on my 30 to 50 million when I kick the bucket.

    Mr. Rorschach is onto something about income tax though. They did just win the lottery so they should be taxed on it immediately and not be able to defer it, they would need to pay it when rounds and his crew give up the ghost.

  3. mike from iowa

    Wingnuts idea of tax reform failure is having the top 1% only get 79% of the 2.4 trillion in cuts dumbass Drumpf has lined up.

    Informed sources say only about 10-11,000 people, out of 325 million per year would have to pay any inheritance taxes.

  4. Rorschach, income from the genetic lottery, I like that.

    Let us go one step further and treat ALL income as income for taxation – no lower rates for dividends or investment income. Tax ALL income at the rate wage earners are taxed.

  5. Yes, O. Yes.

  6. Genetic lottery—I agree with Ror—well phrased, O!

    Do any of the “Fair Tax” shouters call for that same flat rate for investment income?