Under former President Donald Trump's Tax Cuts and Jobs Act (TCJA), the federal estate tax, also known as the death tax, applies only to estates passed to heirs that are worth more than $13.61 million.
If this exemption standard expires or lapses, as Vice President Kamala Harris has indicated she would grant if she becomes president, some experts say it could affect more than just the ultra-wealthy. Point out.
“It creates monopolies,” said one conservative economist.
“It's going to affect a lot of clients,” the New Jersey estate planning lawyer argued.
“This exemption is aimed at reducing double taxation on income,” said another economist. “In a way, it's like a capital gains tax, and people are like, 'Oh, that's…'” [tax] privileged capital. No, it's actually to reduce double taxation on income. ”
Harris' campaign told the New York Times in August that the vice president supports President Biden's tax increase proposal. latest federal budget plan The proposal compiled by the administration would lower the threshold for starting the death tax from about $13 million to about $5 million.
meanwhile, Mr. Harris reportedly Supports death tax reform outlined in the American Housing and Economic Mobility Act of 2024, which would further lower that threshold to $3.5 million. While running for president in 2019, Harris wrote an op-ed in the Washington Post He argued that raising inheritance taxes was the solution to low wages for teachers.
Harris says wealthy Americans and businesses will pay higher taxes to fund economic plans
A sign outside the Internal Revenue Service headquarters in Washington, D.C. (Samuel Corum/Bloomberg via Getty Images)
Critics of allowing the TCJA's current death tax exclusion criteria to expire say it would encourage monopolies, impact small businesses and create additional taxes in important parts of the country, Fox said. told the news. However, there are some who strongly oppose this.
Kimberly Clausing, an economist at the Peterson Institute for International Economics, said, “Even if inheritance tax parameters are restored to normal, only a small portion of inherited wealth (about two-twentieth of 1%) will be affected. In other words, it will only be inherited property that exceeds the (currently low) threshold.” he told Fox News Digital in an email. “The people affected are fairly wealthy and would be able to pay taxes easily, and without an inheritance tax, much capital income would escape tax entirely.”
Kamala Harris wants America to have the world's highest death tax
Garrett Watson is a senior policy analyst at the Tax Foundation, a Washington, DC-based nonprofit organization dedicated to helping Americans understand their tax laws. He said only an additional 0.13% of heirs would be affected under the new death tax standards. He added that falling below the $13 million threshold established under the TCJA would result in approximately $206 billion in lost revenue from 2025 to 2034.
Some economists say thousands more families would be hit by a death tax if a parent dies under Vice President Kamala Harris' plan. (St. Petersburg)
But New Jersey estate planning attorney Michael Kruzer argued that the move would affect “many” clients. “I bought a beach house 30 years ago for $500,000, and now it's probably worth $3 million,” Kulzer said. He noted that “you don't have to be really wealthy right now” to reach a property valuation of $3.5 million or even $5 million when you add in other assets such as pensions.
Numbers show Harris' tax proposal can help small businesses with one hand and catch it with the other.
Meanwhile, Richard Stern, an economist at the Heritage Foundation, said, “It's really the business part that's going to affect a lot of people.''
Stern used the example of aspiring McDonald's franchise owners, who need an average start-up cost of $1.5 million to $2.5 million to get started. “If the franchise purchase price for a McDonald's is $1.5 million, you don't need to own that many restaurants to get a value of $3.5 million or $5 million.” Family farms and family construction companies, too. , Stern added, is an example of a potentially vulnerable target. A family-owned company goes public About being forced to sell, at least in part because of inheritance tax.
A new website released by the Trump campaign tallies how much voters expect to pay in tax increases when former President Donald Trump's tax cuts expire next year. (KamalaTaxIncrease.com)
Stern added that small businesses don't need to be far above the threshold to be hit with a hefty tax bill if the owner dies and attempts to pass the inheritance tax on to one of his successors. . Stern argued that this would force the heirs to sell parts of the business, thereby “creating a monopoly.”
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“The people most affected are often those who don't hold their income in cash. Cash is often held in stocks, in the case of companies. And to pay for it, you have to use it. We'll have to sell it,” Veronique de said. added Rugie, a senior fellow at George Mason University's Mercatus Center. “So in a way, I don't really care how many people it affects. It's just bad, bad policy.”
Oprah Winfrey, who supported Harris as a presidential candidate, blew up the federal estate tax in 1997 He blamed it on “double taxes'' and said, “Why do I always hear stories about my aunt leaving her house behind or leaving her things behind and she can't maintain the house because the taxes are so high?''
“In a way, it's like a capital gains tax, and people are like, 'Oh, that's…'” [tax] privileged capital. No, it's actually to reduce double taxation of income,” de Rugy agreed in a conversation with FOX News Digital.
The Harris campaign declined to provide an on-the-record response to this article.
