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2021-5-25-09_Washington_DC_Capitol_Shutter_640x640

Regulation and Compliance > Legislation

New House GOP Bill Repeals Estate Tax

By Melanie Waddell

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House Republicans have introduced new legislation to repeal the estate tax and generation-skipping transfer tax.

House Ways and Means Chairman Jason Smith, R-Mo., led the legislation in the 117th Congress.

Rep. Randy Feenstra, R-Iowa, is leading the bill in the 118th Congress, with Smith’s strong support, notes Andrew Lautz, a senior policy analyst for the Bipartisan Policy Center’s Economic Policy Program.

Feenstra introduced the bill, H.R. 7035, The Death Tax Repeal Act, on Jan. 18 with 162 of his Republican colleagues.

The estate tax ”represents double taxation at its worst,” Feenstra said in a statement. “By fully eliminating the death tax, we can keep China away from our farmland, allow family farms and small businesses to succeed, and encourage the next generation of Iowa farmers and business owners to plant their roots in rural Iowa, support our main streets, and contribute to our economy.”

Lautz told ThinkAdvisor Friday in an email message that “from a budgetary perspective, it’s important lawmakers offset the cost of new tax cuts or tax repeals like the one proposed here” in Feenstra’s bill.

“Fully repealing the estate tax would be expensive, likely resulting in hundreds of billions of dollars in increased deficits without an offset,” Lautz maintained.

That said, Lautz continued, “the estate tax has never been a major contributor to total federal tax revenue. It averaged 2% of all revenues per year in the 1960s-1970s, 1% from the 1980s-2000s, and just 0.6% of revenues since the start of the 2010s,” Lautz explained.

The estate tax “is projected to bring in around $25 billion per year in revenues until the expiration of the TCJA exemption in 2025, and $40 billion to $50 billion per year after,” Lautz added, referring to the Tax Cuts and Jobs Act.

Will It Pass?

Feenstra’s bill “is highly unlikely to pass in this session of Congress. President Biden would very likely not support this, given his administration has proposed changes to estate tax rules that would expand the tax’s reach rather than limit it,” Lautz relayed. “I highly doubt the Senate would pass it either.”

Estate Tax Deadline Looms

Congress, however, will be faced with estate tax questions “in the next 24 months: the 2017 Tax Cuts and Jobs Act effectively doubled the amount of assets a taxpayer could exclude from the estate tax (from $5 million to $10 million, adjusted for inflation; the exclusion is $13.6 million in 2024),” Lautz explained.

This provision “expires at the end of 2025, and many Republicans will want to keep it,” Lautz said.

“The doubling of the exemption cost $83 billion when Republicans enacted it in TCJA, and CBO estimates it will cost $126 billion over the next 10 years to make it permanent,” Lautz said.

Melanie Waddell

@Think_MelanieW

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