The House Republican freshman class has ratcheted up pressure on Speaker John Boehner to draw a sharp contrast with Democratic progressives and bring full repeal of the federal estate tax — popularly derided as the “death tax” — to a vote on the House floor.
Congressional Republicans, GOP freshman class president Rep. Austin Scott wrote in a public letter to the speaker, “are eager to present a clear cut choice to voters: Support the Republican plan to bury the death tax or support Democrats’ plan to hike the death tax to a crushing 45 percent rate, or higher.”
The Death Tax Repeal Permanency Act of 2011, introduced by Rep. Kevin Brady in March 2011, has 206 House co-sponsors, including four Democrats, ensuring its easy passage in the GOP-dominated House.
On the Senate side, Republican John Thune proposed a version of the same legislation in March of this year. That bill currently has 36 cosponsors. (RELATED: As Obama touts Buffett tax, progressive ‘death tax’ comes under national siege)
While national polling shows Republicans are fighting an uphill public-opinion battle against President Barack Obama’s proposed “Buffett Rule” tax hike, state and national polling consistently shows that a majority of Americans oppose the estate tax and favor its permanent repeal.
“The American people,” Scott wrote, “favor the Republican proposal — consistently 60-70 percent of voters want the death tax buried permanently.”
President George W. Bush’s 2001 tax cut package gradually lowered the federal estate tax beginning in 2002, bringing it to zero in 2010. But since Congress didn’t act to maintain the result, the top rate — for estates worth over $5 million — rose back up to 35 percent in 2011.
That top rate is set to rise to 55 percent in 2013, and will also lower the bar to include estates worth more than $1 million.
“Americans don’t buy it and the majority of them would like to see the tax eliminated,” Palmer Schoening, director of federal affairs for the American Family Business Institute — a trade association that represents family business owners and farmers — told TheDC.
“U.S. tax policy,” Schoening continued, “should encourage upward mobility yet the death tax sets a ceiling for success, which is in complete opposition to the idea of the American dream. U.S. tax policy should also encourage international competitiveness, yet the U.S. currently has one of the highest death taxes in the world. Eventually, the politics will catch up with the popular opinion on this issue. The owners of America’s family businesses will continue to push back until the tax is deep-sixed permanently.”
The estate tax is a tax on the property of Americans who have died. It has become a favorite villain for supply-side economists, who maintain that 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 bigger competitors can.
Proponents of the federal estate tax argue that it is an important source of government revenue and a barrier against the development of an American ruling class. (RELATED: Fareed Zakaria: Americans should give half of inheritance to government)