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:

“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.