The estate tax is basically an inheritance tax that people with a total value of over $5.49 million (in 2017) pay when they die. Anyone below that value is tax exempt upon death. This means it only affects a few thousand Americans every year – about 1 in 500 deaths.
This makes it a divisive issue. The right wants to kill the tax and says that it’s hurting small businesses, farms and farmers – the left wants to keep it as a source of benefits for millions across the country. The right says that the rich deserve to keep what they earned, rather than be taxed unfairly for it – the left says that the rich have far more than they could need, and others are struggling at the bottom of the system with no way out.
It’s a political football – while it’s a simple issue of a single tax that affects a few thousand Americans a year, the sheer mention of it elicits passionate responses and entire essays from both sides of the spectrum. The debate is a heated one, but there’s not much room for concessions – and so far, the left has been losing.
The estate tax has been dying for two decades – exemptions have risen from $600,000 to $5,490,000 per individual, and the tax rate has gone down to 40%, from 55% in 1997. But the Republicans want it gone entirely. Their arguments are that:
To the Grand Old Party, the idea of estate tax repeal is basically inviolable – and they got what they wanted for a brief time in 2010.
Aside from being an easy issue to stand against the opposing party, Democrats argue that the estate tax repeal is a free lunch for the country’s wealthiest at a time when wealth inequality is higher than ever before – as they saying goes, the rich get richer, and the poor get poorer.
Given the current economic climate, it’s all too easy to point out that most Americans don’t benefit from an estate tax repeal, and that in fact may hurt America’s poorest.
Politics is at its best when it can make decisive decisions for the greater good of the country, and its future in the world. When two opposing ideologies can come together to introduce a new plan for the economy, or agree temporarily on a social issue.
When politics only leads to strife and name calling, it is at its weakest. There is no discussion there, no room for growth or learning on either side. And on issues like the estate tax repeal, it’s unlikely to see much give on either side of the political spectrum.
On the right, the Republicans believe that by relieving the country’s richest of the burden of the estate tax, they can create conditions that give these men and women the financial freedom to reinvest into their own businesses and invigorate the working class through more jobs, and a stronger economy.
On the left, the Democrats vehemently oppose this viewpoint, and figure that the country’s wealthiest want just one thing: to stay wealthy, and pass their wealth onto their children, rather than cutting into their own personal profits to bolster the underclass.
Politics is messy, and there’s nothing clear cut about this. Both sides have a point, and both sides aren’t willing to budge on it. Democrats argue that only 0.2% of Americans are affected by the cost of the estate tax – Republicans would rebuff that statement by arguing that those 0.2% build American jobs and keep the economy going, and more money in their pocket is more power for the people.
Your political opinion matters – specifically in the form of a vote. It may be years before the “death tax” dies – but when the time comes, your continued support one way or another will help influence the policies of the future.
But when it comes to the here and now, the estate tax still exists. And if you’re one of the few Americans who must deal with it, know that there are numerous estate planning specialists and strategies that exist expressly to reduce the impact of the estate tax on your children’s inheritance. In the hands of the right professional, a well-crafted estate plan can save you millions.
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