Death to the Death Tax
Obama's Treasury is seeking to squeeze more revenue from small businesses.
Here’s something you might not have heard about that happened last month, during the height of the vacation season when not a lot of people are paying attention to what’s going on in Washington.
The Treasury Department quietly announced in August that it is going to propose a rule to make an adjustment to the Estate Tax, more commonly referred to by a far more accurate name, the Death Tax. As noted in The Wall Street Journal, Treasury has proposed to limit discounting of interests in small and closely held businesses, which would in turn “raise the official value of these stakes in family firms, exposing them to higher tax bills.”
It used to be that the IRS let small businesses discount their interests to reflect the market value of their company, not a percentage of the firm’s overall wealth.
What? Did somebody say “wealth”? The Obama administration has spotted a potential source of additional revenue. It’s really a pittance compared to total government spending. In 2014, revenue from the estate tax accounted for 0.43% of all federal revenue. The estate tax powers the government for two days out of 365.
Benjamin Franklin once said, “In this world nothing can be said to be certain, except death and taxes.” He did not mean to combine the two as leftists have done. All the Left sees here is a chance to live up to the creed of “fairness.” But how can it be we still allow ourselves to live under a tax system that taxes you all your life, then again when you die?
The estate tax rate currently stands at 40%. Hillary Clinton recently announced she wanted to raise it to 45%, then accused Donald Trump of protecting his own investments by calling for a complete end to the death tax.
Of course, Clinton and her husband don’t personally have anything to worry about with the estate tax. Economist Stephen Moore writes, “Hillary and Bill Clinton have gone to great lengths to shelter their own fortune from the death tax, by using sophisticated trusts and moving their New York home into residence trusts to shield it from taxation, according to a Bloomberg analysis, all while pushing for higher death taxes on small businesses.”
The same can be true of most of the very wealthy, who can afford to move money around to avoid the tax. Do you think Bill Gates or Mr. Fair Share himself, Warren Buffett, will pay the death tax?
The death tax doesn’t discriminate and it doesn’t just fall on the idle rich as the Left would have us believe. A number of families who inherit a small business fall under its grip each year and are forced to sell their businesses or other assets in order to pay the tax bill. That’s lost jobs, lost economic opportunity, and lost revenue for state and federal governments through one or more of their myriad tax laws.
We shouldn’t be surprised that the Obama administration is circumventing Congress once again. This sort of proposal would never make it out of committee. With his administration winding down to its final months, expanding the death tax is just one of many such unilateral power plays we will likely witness.