- Keeping government accessible (8/19/16)
- Fighting for reliable rural flights (9/18/15)
- The status of our economy (7/11/14)
- Holding Japan accountable in trade negotiations (5/30/14)
- Solutions for our budget and the economuy (4/18/14)
- Religious freedom must be protected (3/28/14)
- Protecting American interests through trade (1/24/14)
Killing the death tax
It is said the only things certain in life are death and taxes. Somehow the federal government has managed to combine both.
The estate tax -- commonly referred to as the "death tax" -- is a tax on assets transferred following an individual's passing. This tax is a drag on our economy because it taxes capital, the fuel of economic growth.
I long have supported a complete and permanent repeal of the death tax because it punishes individuals at their death and, in effect, is a double tax on assets which were already taxed when earned.
Recent estimates show a full repeal of the tax would create 1.5 million jobs, increase small business capital by more than $1.6 trillion, increase payrolls by 2.6 percent and expand investment by 3 percent. Yet, with the purported focus on job creation, this Congress and Administration refuse to enact a permanent repeal.
Grieving families are faced with a punitive tax which raises only 1 percent of all federal revenue. In fact, estimates show the death tax costs the economy more in lost growth than it raises. The death tax discourages savings and investment in small businesses and family farms, threatening their very existence from one generation to the next.
People should be able to pass their earthly assets to family without a call from the IRS. Why should the prosperity Americans accumulate through hard work and innovation be forfeited when their lives come to an end?
Just days ago, Congress had the chance to permanently repeal the death tax. Unfortunately, it fell far short despite the fact many of my colleagues and I were willing to work together to find a real solution.
Instead, Congress passed a bill which would permanently extend the excessively high tax rate of 45 percent with an un-indexed exemption amount of $3.5 million. At the 45 percent rate, nearly half of the value of farms, ranches and small businesses would be taxed.
This measure didn't kill the death tax, didn't set a reasonable rate, didn't provide an appropriate exemption amount, and isn't indexed for inflation.
By comparison, let's take a look at the alternative minimum tax (AMT). Like the death tax, the AMT was originally designed to impact a relatively few taxpayers. But like the death tax, the AMT was not indexed for inflation, and now hits 26 million middle-class taxpayers every year.
More and more family farms will fall victim to the death tax unless a permanent repeal is enacted. It is a shame Congress chose to employ a gimmick as a Band-Aid rather than solve the underlying problems which could prove devastating to small, family-owned businesses and agriculture producers
Abolition of this harmful tax will help spur economic recovery, put unemployed Americans back to work, and increase the long-term growth potential of the economy.
Most importantly, repeal of the death tax would echo what we have been taught for so long: if you work hard, you can pass the fruits of your labor to your children without fear the government will take it away.