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ATR Supports Thune Amendment to Senate Budget to Kill Death Tax
Senator John Thune (R-S.D.) will today offer an amendment (#307) to the Senate budget resolution. This amendment would create a deficit neutral reserve fund to fully and permanently repeal the death tax. ATR is supportive of this amendment and urges all senators to vote for it.
The death tax was permanently changed after the fiscal cliff. The top death tax rate is 40 percent. There is a death tax "standard deduction" of $10.3 million (indexed to inflation) for a married couple, half that for singles.
While these levels exempt most Americans from having to pay the death tax, those who do face this liability spend billions of dollars every year paying lawyers, accountants, actuaries, and life insurers to plan tax avoidance strategies. This sunk cost means less capital available to create jobs and grow the economy.
According to Reagan economist Steve Entin of the Tax Foundation, repealing the death tax would grow the economy by $1 trillion over the next decade and yield the U.S. Treasury an additional $150 billion in tax revenue due solely to economic growth.
Repealing the death tax is relatively-easy from a budget perspective. According to the Congressional Budget Office, the death tax will yield $200 billion in tax revenue over the next decade, less than one-half of one percent of all federal tax revenues. This level is less than one-tenth of one percent of all economic output. Repealing this destructive tax in a deficit-neutral and revenue-neutral way is not one of Washington, DC's greater policy challenges.