House votes to repeal estate tax

The House voted Thursday to repeal the estate tax, a longtime priority of Republicans that also spurred Democratic charges that the GOP is in the pockets of the rich.

The 240-179 vote broke down largely on partisan lines, with seven Democrats voting to repeal the estate tax and three Republicans voting against it. 

{mosads}The White House has threatened to veto the measure, and the bill does not appear to have the 60 votes necessary to break a Democratic filibuster and get through the Senate.

GOP leaders pushed ahead with Thursday’s vote, timed to coincide with this week’s tax filing deadline, in part to give their rank and file the opportunity to vote on repeal.

The House last voted to end the estate tax a decade ago — meaning, as Majority Whip Steve Scalise (R-La.) put it this week, “the vast majority of our members in the Republican conference have never had the opportunity to stand up for small businesses who are threatened by the death tax everyday.”

Sen. John Thune (S.D.), a member of GOP leadership, has introduced legislation across the Capitol to repeal the estate tax. But Majority Leader Mitch McConnell (R-Ky.) hasn’t said when or if that proposal might get a vote. 

Fifty-four senators went on record in March as supporting estate tax repeal, as part of a non-binding budget resolution vote. But that also leaves supporters six votes short of the 60 regularly needed to clear legislation. 

Separately, the House also voted to permanently extend a deduction for state and local sales taxes that lapsed at the beginning of this year, a $42 billion measure. The White House has threatened to veto that legislation as well.

Taxpayers are generally allowed to deduct either their local sales or income taxes. But the income tax deduction is already permanent, leaving lawmakers from states that don’t charge income taxes — like Texas — wanting to indefinitely extend the sales tax deduction as well.

Killing off the estate tax would increase the deficit by $269 billion over a decade.

The Joint Committee on Taxation projects that the estate tax will hit 5,400 estates in 2015, or roughly 0.2 percent of the 2.6 million deaths expected in the U.S. this year. 

Under current law, individuals with estates of under $5.43 million this year, and couples with $10.86 million estates, are exempt from paying the tax. Estates pay a maximum rate of 40 percent on the amount of assets above those levels.

The vote to repeal the estate tax comes as the 2016 presidential campaign is starting to heat up, and as GOP candidates are grappling with how to deal with rising income inequality in the U.S.

Nonetheless, Republicans believe they have a powerful argument for repealing what they believe is an immoral tax that resonates with voters across the economic spectrum.

Republicans argue that people are taxed every step along the way as they accumulate assets, meaning their heirs shouldn’t have to worry about the estate tax once they die. The estate tax, they add, is more likely to hit family farms and small businesses than the ultra-wealthy who can afford complex estate planning.

“Can you imagine working your whole life to build up a family-owned business or a farm, and then upon your death, Uncle Sam swoops in and takes nearly half of what you spent a lifetime building up for your children and grandchildren?” said Rep. Kevin Brady (R-Texas), the bill’s sponsor.

Not surprisingly, Democrats don’t see it that way, and saw Thursday’s vote as another way to cast the Republicans as the party of tax cuts for the rich.

“Today’s vote to repeal the estate tax is just the Republicans’ last attempt to tilt the U.S. tax code in favor of the ultra-wealthy campaign donors,” said Rep. Jim McDermott (D-Wash.).

Obama, speaking in North Carolina on Wednesday’s April 15 tax deadline, sought to make a pointed contrast between repealing the estate tax and his plan for more middle-class incentives, proposals he said would help vastly more taxpayers.

“So their plan would cut taxes for the top one-tenth of 1 percent and let taxes go up on 25 million working families and students,” Obama said. “I don’t need a tax cut.”