Fifteen lawmakers in the U.S. House of Representatives signed on as cosponsors of a bill that would remove the federal government’s tax on money deceased individuals transfer to family or other loved ones.
The estate tax, commonly referred to as the “death tax,” is the only wealth tax levied by the federal government. Death taxes are charged on top of the taxes already collected by the government on that money during the original earner’s life.
In March, 15 lawmakers joined a growing list of cosponsors of House Resolution 631, titled the Death Tax Repeal Act of 2017. The bill was sponsored by Rep. Kristi Noem (R-SD) in January.
At press time, the bill is under consideration by the House Ways and Means Committee.
Easing Burdens on Families
Noem says her bill is about helping hardworking American families survive and prosper.
“Today, around 70 percent of family-owned businesses fail to survive even one generation,” Noem told Budget & Tax News. “My dad woke up at the crack of dawn almost every morning to build a farm large enough so his kids could farm together one day, if we wanted to. When he died unexpectedly in a farming accident, that American dream was put into jeopardy by the death tax. We ought to be making it easier, not harder, to pass family businesses from one generation to the next. My legislation does that.”
Noem says the death tax is especially tough on families of small-farm owners such as her deceased father.
“This tax disproportionately impacts farmers, ranchers, and small businesses, who have a large number of assets but not necessarily cash in the bank,” Noem said. “It’s not right. My legislation fully and permanently repeals the death tax, so no family would have to go through what ours did. Families asked to pay the death tax have already paid taxes when they bought the land or machinery. They shouldn’t be taxed on it again just because a loved one has passed away.”
A Popular Repeal
Patricia Soldano, founder of the Policy and Taxation Group, a think tank promoting economic liberty, says repeal of the federal death tax is popular with voters.
“Death shouldn’t be a taxable event,” Soldano said. “When we surveyed people—just generally around the issue of the tax and what they thought about it—46 percent said that the tax should be reduced or eliminated.”