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Last week, U.S. Sens. Tommy Tuberville, R-AL, and Katie Britt, R-AL, joined Senate Majority Leader John Thune, R-SD, in reintroducing legislation to permanently repeal the federal estate tax.
The so-called Death Tax Repeal Act would completely eliminate the federal estate tax levied on the transfer of personal property to inheritants after one’s death. Tuberville, Britt, and Thune argued that the tax is purely punitive in nature and that it harms family-run businesses, including farms and ranches.
“The Death Tax destroys American jobs by stifling profitable businesses that employ hardworking Americans,” said Tuberville in an official press release. “Our government should be focused on creating an economic environment that preserves small businesses and family farms, instead of taxing them out of operation. I will keep pushing for policies that incentivize our next generation of farmers and business owners, so that we can continue to rely on their contributions for a strong economy.”
Britt echoed Tuberville, calling the estate tax “a form of double taxation.”
“The Death Tax unjustly forces the next generation of farm families to decide between bankruptcy or selling their farm to a corporation. No American farm family, already suffering from the loss of their loved one, should be faced with this devastating choice,” Britt continued. “Repealing the Death Tax safeguards Alabama’s incredible farmers and cattlemen who work tirelessly throughout their lives to feed and clothe our state, nation, and world. I will continue to fight to protect the ability of Alabama farmers, cattlemen, and small business owners to live the American Dream and pass on their family’s legacy and livelihood to their children.”
Proponents of the estate tax argue that it fights against economic inequality by providing incentives to give to charity, covering tax loopholes related to capital gains, and redistributing exorbitant inheritances.
According to the Brookings Institute, “The alleged negatives of the tax—its effects on saving, small businesses and farms, and its high compliance costs—are often grossly overstated. The hysteria in labeling it the ‘death tax’ is also misplaced. About 98 percent of deaths result in no estate taxes, its one-time burden at the time of death can be reduced with prudent estate planning devices such as life insurance and the tax is imposed on wealth, not on death itself.”
The Institute of Taxation and Economic Policy also notes that the estate tax does not apply to over 99 percent of American households. In 2019, “only 8 of every 10,000 people who died left an estate large enough to trigger the tax.”
The tax is inherently progressive, only applying to the wealthiest Americans. Additionally, there are already special provisions in place to protect family-owned businesses and farms — like those mentioned by Tuberville and Britt — from being overly-burdened by the tax. Less than 1 percent of farm estates owed any federal estate taxes in 2020.
