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House Repeals Estate Tax But Obama Veto Likely

By a vote of 240-179, the U.S. House voted to repeal the estate tax Thursday. President Barack Obama is expected to veto the bill, if it also passes the Senate, which is considered unlikely.

Still, the vote drew praise from the American Farm Bureau Federation.

“Farmers and ranchers need tax laws that protect their family businesses. They don’t want to be punished for their success. With House passage of the Death Tax Repeal Act of 2015, we are one step closer to tax reform that will help farm families invest in the future and pass their businesses on to the next generation,” Farm Bureau president Bob Stallman said in a press release.

“Farmers’ and ranchers’ assets are tied up in the land, not sitting in a bank. And farm families certainly don’t have cash on hand to pay a double tax at death. This leaves many surviving family members with few options other than selling off part or all of their land to pay estate taxes. Too often, cashing in these assets can cripple their business,” Stallman said.

The bill repeals the estate tax and revises the top gift tax rate to 35%, according to a summary on the Library of Congress website. 

Senator John Thune (R-SD), who has introduced the same legislation in the Senate, praised Thursday’s House passage of repeal.

“The death of a loved one should not be a taxable event,” Thune said in a statement. “Imposing yet another layer of taxation, as high as 40%, on a family’s life savings is not just bad for the economy, it’s unfair to those who have spent their entire lives building job-creating small businesses, farms, and ranches in their local communities. This legislation will finally give farmers, ranchers, and family business owners the peace of mind of knowing that they no longer have to spend substantial sums on planning to minimize their death tax liability. I applaud the House’s bipartisan approval of this bill and look forward to the Senate taking it up later this year.”

Partisan divisions could stop Thune’s effort in the Senate. His bill has 30 co-sponsors, all Republicans, and the House vote was split almost along party lines, with only seven Democrats voting for repeal and three Republicans voting against it.

The White House Blog describes repeal of the estate tax as one of the “giveaways to the wealthy few.” 

Estate tax repeal may be popular among farmers but it may not have broad public support. Thursday, the editorial board of the newspaper, USA Today opposed repeal, saying it would reward 0.2% of the population and cost the rest of the nation. The bill passed by the House Thursday would add $269 billion to the federal deficit over 10 years. 

 

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