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Political Communication

The “Death Tax” Talk is Back

Tax Politics

In the past 7 days alone, 10 different Republicans have begun circulating talking points in their official constituent e-newsletters about the specter of the “death tax”. This term is the Republican pejorative that refers to the federal estate tax which subjects large estates that are bequeathed upon death to a progressive tax. If history is any guide, we are in for more focus on this topic in the coming months.

Republican legislators have always emphasized that large estates ought not be subject to taxes more than Democrats; looking at official e-newsletters from 2010 through today, the patterns are clear. Additionally, the use of terminology is partisan, with Republicans using “death tax” more often while Democrats prefer to call it the “estate tax”.

E-newsletter data are available here.

But before delving into why this is cropping up again now or how members of Congress have approached this topic, let’s first have a look at how the federal estate tax works.

In 2021, the threshold for the federal estate tax is $11.7 million. For married couples, this threshold is doubled; estates up to $23.4 million are not subject to the tax. This means that the first 11.7 million bequeathed by someone is untouched by the federal estate tax, but any additional money beyond that is taxed in the following way:

2020–2021 Federal Estate Tax Rates by Amelia Josephson for Smart Asset on Jan 22, 2021

Everyone who dies and plans to leave an estate larger than 11.7 million is subject to the federal tax system for anything beyond 11.7 million, but people in 12 states are subject to a state estate tax, which kick in at various dollar amounts.

The progressive federal estate tax strategy is capped of 40% of all elements of an estate in excess of 1 million dollars (above the 11.7 million which is not taxed). The current federal structure is the result of a set of changes adopted over the past 20 years that have made the exemption dollar amounts higher. Consequently, fewer people have estates that surpass that amount, and fewer (though still in the billions) dollars are netted by the federal government.

The majority of related legislative changes are described in detail here; the big pieces of legislation that led to these changes are The Economic Growth and Tax Relief Reconciliation Act of 2001, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, the American Taxpayer Relief Act of 2012 and the most recent change adopted in the 115th Congress, known then as H.R. 1. That priority legislation introduced by House Republicans in 2017, The Tax Cuts and Jobs Act doubled the exemption to $11.18 million in 2018 and then permitted indexed increases in successive years — with elements sunsetting in 2025–2026, but the exemption level still remaining at $5.5 million.

Very very few individual estates are large enough to trigger the federal estate tax in any given year, in 2019 just 1,900 people out of 2,910,000 deaths had estates included in the federal program. Graphing this sort of thing overtime is tricky because if one uses a full scale of 0–100% the shares of deaths eligible is so small as to be invisible. But when zooming in on very small share of estates subject to this tax shows that the declines have been marked.

Yet, while the numbers of estates actually paying the tax has become smaller in recent years, the amount of revenue to the federal government has mostly stayed the same, hovering around $15–20 billion dollars. The few estates subject to this tax, when taxed, are bequeathing large amounts on average.

But back to recent politics. What’s happened over the past few days that has members of the GOP interested in this issue again? Why are they starting to talk this up in constituent communication? Answering the first question is straightforward. Republican legislators are introducing legislation as an attempt to forever repeal the estate/death tax knowing full well that this sort of thing has very little chance of passing given the Democratic control of both chambers and the presidency.

On March 12, Senator Marco Rubio (R-FL) heralded Senator John Thune’s (R-SD) reintroduction of what he calls the Death Tax Repeal Act of 2021 (formal title S.617 is A bill to amend the Internal Revenue Code of 1986 to repeal the estate and generation-skipping transfer taxes, and for other purposes) by telling constituents about his support of the effort.

The language used to justify and argue for this action is to protect “small” businesses and farms from facing an additional burden while grieving with the death of a family member. There are appeals to the rightness of being able to leave a legacy to others within one’s own family. Senator Joni Ernst (R-IA) signaled her preference for the legislation arguing, “Iowa’s family farmers have continued to feed and fuel the world. For most folks, farming is in their blood, and Iowans look forward to passing their business down to the next generation.” Joining her are congressional first years, Representatives Ashley Hinson (R-IA) and Randy Feenstra (R-IA) offering similar justifications for related efforts in the House.

First year member Rep. Steel (R-CA) wrote about co-sponsoring an amendment to repeal the tax saying, “[it] is a tax on your right to transfer property at the time of your death. This tax puts an unfair burden on family-owned farms and small businesses. Those who have just lost a loved one should not also be faced with this punitive tax.”. Rep. Diana Harshbarger (R-TN) echoed this argument, “This bill would protect family-owned businesses and farms from being hit with a hefty tax in the event a loved one dies. This is common sense legislation.”. And Rep. Rick Allen (R-GA) added “Instead of paying a hefty tax that could cost their life-savings, we can protect family-owned businesses and allow them to focus on continuing their family legacy and investing in technology, workers and future operations.”.

But again, these won’t pass, so why talk about this in constituent communications? For a lot a reasons. This talking point polls really well, it gives something to motivate base voters and then use in policy debates (despite the fact that an infinitesimally small number will ever be subject to the estate tax, and the the revenues might very well help a greater numbers of voters), and Democrats very rarely offer a counter narrative.

In 2021 no Democrats have mentioned either the estate tax or death tax in these official communications. In fact, the most recent Democrat to mention the estate tax was Peter DeFazio (D-OR) in December 2019 as a part of a laundry list of things Republicans had done in Congress. One of the only Democrats to ever argue for reducing the estate tax exemption is Rep. Jimmy Gomez (D-CA) when he argued for his bill, the For the 99.8% Act to expand the estate tax, saying that if passed, top 0.2 percent of estates worth over $3.5 million will finally begin paying their fair share of taxes. This amounts to $2.2 trillion in tax revenue that can be used to address critical needs for working families and the most vulnerable among us!

Rep Jimmy Gomez “It’s been a minute. Here’s what you missed.” Dec 4, 2019

This sort of lip service politics is one that Republicans in Congress seem to be better at and more keen to use. So much of politics is story telling, and in political communications if one perspective of a story is told much more often, at a louder volume, and by more people, it’s no wonder that version is what prevails in public opinion. If Democrats want to have any chance in reestablishing the estate tax in the future and garnering public support, they’ve got a lot of groundwork they need to start laying now.

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Lindsey Cormack

Lindsey Cormack

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I am an associate professor of political science and run www.dcinbox.com. I teach at Stevens Institute of Technology and reside on the Upper East Side