On Jan. 1, 2013, the estate tax is set to climb to as high as 55 percent — among the highest in the world economy — with the exclusion rate dropping to just $1 million, making 2013 a bad year to die for small businesses owners and the wealthy.
The estate tax — often called the death tax — had been on the decline due to the Bush tax cuts, even reaching zero in 2010. Since then, it has risen back to 35 percent, with an $5 million exclusion, where it remains today.
As blogged by conservative organization Americans for Tax Reform (ATR), research by the Urban Institute and Brooking Institution’s Tax Policy Center says that “if the current death tax expires, then the resulting, stricter exemption threshold will force 114,600 estates to file for the tax in 2013 — this represents a 13-fold increase from the previous year’s 8,800 estates, and countless wasted hours filling out tax paperwork. Of that cohort, an unfortunate 52,500 will be liable for the tax, way up from 3,300.”
While the tax would only affect 2 percent of the American population, ATR points out that its impact is far broader, is “it causes many wealthy individuals to save less, choosing instead to retire early or, as Milton Friedman put it, ‘dissipate their wealth on high living.'”
“This reduction in savings,” the report continues, “means a concomitant reduction in investment, lessening the flow of capital to businesses and organizations where countless ordinary Americans are employed.”
The estate tax has been under assault over the past year. Most recently, a coalition of non-profit groups and conservative Republican lawmakers has pushed for permanently repealing the estate tax — and putting politicians of both parties on the record as to whether they support full repeal.
There are 217 co-sponsors for a bill to end the estate tax in Congress, with a 218th, The Daily Caller has learned, expected soon. Republican leadership, however, has appeared hesitant. (RELATED: Lawmakers, activists ratchet up pressure on GOP leaders for full ‘death tax’ repeal)
“In addition to the vote to extend current tax policy this month — which we fully support — our coalition of industry groups, the freshman class, and a large contingent of Republican Study Committee members are requesting that House leadership call a vote on Congressman [Kevin] Brady’s bill to fully repeal the death tax this fall,” Schoening Strategies President and Family Business Coalition Chairman Palmer Schoening told TheDC.
The Family Business Coalition is a coalition of policy and industry groups opposed to the estate tax. One member — the 60 Plus Association, has already poured millions of dollars into ad buys in swing states this election cycle, pushing back against Obamacare and other laws it says are negatively affecting its members.
“60 Plus is gearing up to make death tax repeal a key issue in major Senate and House races across the country through ad buys and televised campaign events,” 60 Plus Chairman Jim Martin told The Daily Caller earlier this week. “We are currently mobilizing over 7 million seniors to call for a vote on Congressman Brady’s ‘Death Tax Repeal Permanency Act of 2011′ to put House members on the record for the first time since 2006. Our seniors believe Republicans should always vote to kill the death tax, not wound it.” (RELATED: As Obama touts Buffett tax, progressive ‘death’ tax comes under national siege)