As part of the 2017 tax bill, Congress came within a whisker of abolishing the estate tax. In the end, Congress weakened the century-old levy on inherited wealth paid exclusively by multi-millionaires and billionaires.
The estate tax was one of the substantive negotiating points of the joint tax conference committee that reconciled the differences between House and Senate versions in December 2017. House Republicans, fulfilling a decades-old aspiration, voted along party lines to abolish the tax.
Senate Republicans were divided and several wondered aloud about the necessity of complete repeal. Arizona Senator Jeff Flake, in a moment of candor, pointed out that Congress had already “done pretty well” in modifying the estate tax. He questioned the GOP contention that estate tax repeal would have a positive economic benefit, doubting “whether [repeal] stimulates that much more.”
At a pivotal moment, Senator Susan Collins of Maine and Senator Mike Rounds of South Dakota signaled their opposition to estate tax repeal. The Senate voted to double the wealth exemption but retain the tax.
The law that was finally enacted mirrored the Senate version. The amount of wealth exempted by the tax, minus deductions—such as for charitable giving—was doubled from $5.49 million for an individual to $11.18 million—and from $10.98 million for a couple to $22.36 million. The 40 percent rate remained unchanged.
Prior to congressional action, the estate tax was on track to raise $280 billion over the coming decade. After this reform, the tax is estimated to raise $32 billion less over the next decade, according to the Congressional Budget Office.
Read the full article at The American Prospect.