Will Republicans kill the estate tax?

Will Republicans kill the estate tax?

There could be lots of fights among Republicans over the details of tax reform … if they’re fortunate enough to get that far.
However, on one measure there’s likely to be unanimous support: Repealing the federal estate tax, or what critics derisively refer to as the “death” tax.
House Ways and Means Committee Chairman Kevin Brady calls it “un-American.”
“You work your whole life to build up a nest egg or a family-owned business or family farm. Then you pass away. … Uncle Sam can swoop in and take over 40% of everything you’ve earned over a certain amount. It’s just wrong”, Brady stated last week at an event promoting tax reform.
But that assertion overlooks a few key information about the estate tax, which the Congressional Budget Office projects will improve between $25 billion and $34 billion a year over the following decade.
The Tax Policy Center estimates only 80 own family-owned businesses and farms will ought to pay any estate tax in 2017.
The Congressional Research Service predicts a better range for any given year — 159 — but notes they represent much less than 3% of taxable estates.
What’s more, estate tax law officers options to noticeably decrease the tax of a own family business or farm for estate tax purposes.
Furthermore, “with a small amount of tax planning and for a relatively small amount of money you can avoid the estate tax,” said Howard Gleckman, a senior fellow on the Tax Policy Center.
For instance, he said, parents running a family business can take out a particular type of life insurance policy according to the predicted amount of their property’s tax liability, and the proceeds from that policy can cover the tax bill when the’re gone.
Critics often portray the property tax as a way to take a second or even third tax bite out of the apple.
That is, you earned the money, paid income or investment tax on it while you were alive after which it is counted as a part of your taxable estate, so is subject to tax once more.
That virtually can happen, but commonly only if you do 0 estate planning.
However, even in that situation, there may be still a integrated allowance in estate tax regulation that ensures a some money ¬†your heirs will not pay taxes for. It’s called a step-up in basis.
it’s clear that if lawmakers repeal the estate tax, they’ll also repeal the step-up law, at least in part. In fact, President Trump at one point proposed doing each at some stage in his campaign for estates well worth more than $5 million.


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