Trump Targets Estate Tax to Save Time, Effort for Wealthy
President Trump will ask Congress to eliminate the estate tax because it would “save time and effort” among wealthy and successful families, according to a senior administration official.
Treasury Secretary Steve Mnuchin and Trump economic adviser Gary Cohn on Wednesday proposed eliminating the existing tax on estates worth more than $5.5 million for individuals ($11 million for couples) as one element among proposed tax changes the president hopes to enact this year.
Mnuchin and Cohn said Trump’s focus in pushing for a major tax code overhaul is economic growth and job creation, as well as simplicity.
Conservatives have long called for the elimination of what they describe as “the death tax,” and over decades, the issue has taken on a political life of its own.
Under current law, relatively few families have to pay estate taxes on inherited assets. But in the upcoming policy debate about tax benefits -- for companies, the middle class, and for the richest Americans -- the estate tax is sure to be a target among the president’s progressive critics.
“This may not be the best political or economic environment to propose a tax cut that over 10 years gives $269 billion to only 5,000 of the wealthiest inheritors each year,” wrote Gene Sperling, a former White House economic adviser to Presidents Clinton and Obama. In a recent article published by The Atlantic, Sperling suggested Trump and Republicans should strengthen the estate tax rather than repeal it.
Trump’s family wealth, global properties and complex holdings -- and the fact that two of his heirs serve as unpaid West Wing policy advisers -- invite questions about the billionaire’s motives in seeking a tax change that could benefit the Trump family.
The president has continued to refuse to release his most recent tax returns, making it impossible to accurately calculate how his administration’s tax proposals would benefit him and the Trump Organization, which is run by the president’s two adult sons, Eric and Don Jr.
Under existing law, no family estates valued at up to $11 million are taxed at all when heirs inherit. Yet, the senior administration official, who spoke on background to follow ground rules set by the White House Press Office, said wealthy Americans employ complex techniques to avert estate tax obligations, and invest resources and time so their heirs won’t have to pay a dime.
Eliminating the estate tax is equivalent to “simplification,” the official argued.
“We want people to be encouraged to go out and build a business and hire incremental workers, and get bigger and bigger without the fear that, `Oh my God, if I’m the principal owner of this business and I die tomorrow, my family is going to have to disband the business to pay the taxes, so I’m never going to grow the business,’” a senior administration official told a group of reporters on Thursday.
The official mentioned farmers as likely beneficiaries of the president’s proposal.
“We think it’s economically stimulative to encourage family businesses, small businesses, sole proprietors to continue to grow their business, and that’s what we’re doing it for,” the official said, speaking on background. “We’re doing it to be an economic stimulus and get people to invest in their family businesses.”
As evidence that Trump and his economic advisers are preparing for political battle over tax reform, the senior official, who said he is participating in dozens of meetings inside the White House on tax issues, told reporters the president is not seeking and does not expect to find Democratic support on Capitol Hill.
“I don’t think we’re getting a bipartisan bill,” he said. “There’s no sign that we’re seeing any bipartisanship on anything going on right now. We have to be realistic.”
The president believes Democrats obstructed the GOP agenda over the first 100 days, including Trump’s nominees for Cabinet positions and senior-level posts. Senate Democrats, however, insist the White House, populated with inexperienced and overstretched staff members, stumbled over vetting, ethics requirements and other background-check hurdles that slowed the confirmation process.
Presidential transition and personnel experts, as well as some Senate Republicans, have echoed Democrats’ complaints that delays first occur inside the White House.
But that is not how the president or his advisers see it.
“What have the Democrats been willing to support? A hundred days in -- what have they been willing to support? They delayed every Cabinet appointee,” the official complained.
“We would love for [New York Sen.] Chuck Schumer to call up and say, `Look, 100 days is over, we want to work with you on tax reform, we think it’s really important, we’re ready to go to work,’” he continued.
The White House believes no Democrats will support a GOP-backed tax reform bill, and Trump’s team is advising the president to be “realistic.” Some believe the battle will supply ammunition for each party during 2018 campaigns.
Trump has made no serious overtures to Democrats to collaborate on the Affordable Care Act. But the president willingly blessed concessions in an effort to get a funding bill through Congress to prevent a government shutdown on Friday.
The expectation of Democratic opposition reflects, in part, Trump’s desire to sign a tax bill this year. That timing is considered by many seasoned Washington analysts to be a tall order.
“For us to waste three or four months to think that we can get a bipartisan bill done and then have to start over again with a partisan bill, and not get tax reform in 2017 so it’s effective in 2018 -- I think the voters would be disappointed with us, and they wouldn’t understand why we did that,” the official said.
Cohn, asked Thursday about Trump’s proposal to cut the corporate tax rate to 15 percent and eliminate deductions and loopholes, acknowledged that many companies find ways today to pay effective tax rates of less than 15 percent. In those circumstances, the president’s plan would increase their tax liabilities.
“And I’m OK with that,” Trump’s economic adviser told reporters.
