As President Barack Obama canvasses the United States pushing for an increase in taxes on the wealthy — something he is calling the Buffett tax, after billionaire progressive Warren Buffett — the campaign against the “death” tax is gaining momentum both on the state and federal level.
The recent trend against the estate and inheritance taxes, favored by some of the same progressives who champion the Buffett tax, began in Ohio and has spread to Indiana, Tennessee, North Carolina, Oregon and Nebraska Tax activists also hope to make gains in Minnesota and Maine.
Twenty-two states collect such taxes — either an estate tax, which is automatically levied on a dead person’s assets, or an inheritance tax, which is collected when the beneficiary of a bequest receives money or property.
In the Democrat-controlled Senate, Republican John Thune has introduced the Death Tax Repeal Permanency Act to abolish the federal estate tax. That bill follows on the heels of identical legislation launched in the House of Representatives last year — with more than 200 cosponsors from both sides of the aisle — by Texas Republican Kevin Brady.
Right-leaning activist organizations, think tanks and supply-side economists are also mobilizing, including the American Family Business Institute trade association. With seven months to go before the November election, 203 House and Senate candidates, as well as presidential candidate Mitt Romney, have signed its “Death Tax Repeal Pledge.”
“It’s like a backlash against President Obama,” AFBI communications director Charles Chamberlayne told The Daily Caller. “Even today, while he’s out promoting the Buffett tax, it’s really coming to a head. I’m expecting something to happen pretty soon, because the president is starting to push back on it. It’s the anti-Buffett-rule tax.”
The estate tax has become a favorite villain for supply-side economists, who maintain that by taxing Americans’ savings after they die amounts to double taxation and removes incentives for saving instead of spending. Sole proprietorships and other small businesses, they say, lack the tools to protect their assets like their big-business competitors can.
Proponents of the federal estate tax argue that it is an important source of government revenue and a blockade against the development of an American ruling class. (RELATED: Fareed Zakaria: Americans should give half of inheritance to government)
In July 2011, Ohio Republican Gov. John Kasich signed a law repealing his state’s estate tax. That law will take effect at the beginning of 2013. Last month Republican Gov. Mitch Daniels followed suit in Indiana, signing a bill that slashed estate taxes there and moved the state toward eventual repeal over ten years. (RELATED: Indiana set to repeal death tax)
In Tennessee, pressure from advocates and GOP majorities in the state house has pushed an initially hesitant Republican Gov. Bill Haslam to embrace inheritance-tax repeal.. Opponents of the tax plan to shift their focus next to North Carolina, home of a Republican-controlled state house and the lame duck Democratic Gov. Bev Perdue.
Though activists expect a veto from Perdue, they predict success in 2013.
“Once a few states get rid of the death tax, it becomes an argument in other states in terms of being competitive,” AFBI federal affairs director Palmer Schoening told Forbes magazine in a March interview. “Capital is really mobile, and people are too.”