Sen. Sanders’ Claims That Repealing the Death Tax Benefits Only the Rich Couldn’t Be Further from the Truth
Removal of the Death Tax Will Rid All Americans of Unfair and Unaffordable Tax Burden
by Ted Cruz on October 19, 2017 at 9:40 AM
Last night I debated Sen. Bernie Sanders (I-Vt.) in a CNN Town Hall regarding tax reform. During the debate, I called for eliminating the estate tax, also known as death tax, as a part of tax reform. Contrary to claims by Democrats, repealing the death tax will simplify the American tax system and provide needed tax relief for farmers, ranchers and small business owners.
Real Life Effects of the Death Tax
- The United States Senate Committee on Finance released a report focusing on the ineffectiveness of the death tax, specifically stating that ‘the wealthy and well connected use elaborate trusts and secretive shell companies to dodge the tax.’ Many times, wealthy individuals hire lawyers and accountants to find loopholes to avoid paying this tax.
- Family businesses that lack these resources to manage their estates are the ones held accountable to pay this tax rather than the wealthy. Eliminating this tax will help prevent financial hardships imposed by this inflated tax on individuals.
- According to the Tax Foundation, repeal of the death tax will result in an estimated 2.3 percent increase in capital invested in the U.S. economy, ultimately boosting productivity 0.7 percent resulting in increased labor force participation by the equivalent of 159,000 full-time jobs. Tax reform proposals eliminating the death tax anticipate over a 10-year time span $28 billion total revenue increase for small businesses.
- The death tax is double taxation. The descendant paid taxes on this income over the course of his or her lifetime, and death should not be a valid excuse to tax the same money again.
- More than 99 percent of U.S. employer firms are small businesses, many of them family-owned. The death tax establishes a burden that prevents families from being able to keep their businesses running from one generation to the next, and should be put to an end.
- Even businesses that do not end up owing the death tax have to spend their limited time and resources to plan to ensure their businesses can endure from one generation to the next.
- The idea of looking at a single year for the estate tax does not adequately portray the impact of the tax since it is only on deceased individuals. Between 1995-2016 a total of 102,000 closely held businesses (sole proprietorships, partnerships, S-Corps, and closely held C-Corps) and 36,000 farms paid the estate tax.
- On the farm side, according to USDA Agriculture Census, there were 3.2 million farmers in 2012, with a total US population of 314 million, making farmers equal to just over one percent of the population. However, 13 percent of estates subject to the estate tax included farms. The average age of farmers is also increasing, one third of all farmers are over age 65, and 62 percent are over age 55. As our farming generation grows older the number of farmers paying the estate tax will continue to dramatically rise.