US Senator John Thune’s Weekly Column: Working Toward Repealing Destructive and Unnecessary Death Tax

Working Toward Repealing Destructive and Unnecessary Death Tax
By Senator John Thune

John_Thune,_official_portrait,_111th_CongressFor any family, the death of a loved one is a difficult and grievous time. Now add the federal government to this painful period, and the situation becomes a nightmare. The federal government shouldn’t force grieving families to pay a tax on their loved one’s life savings, built from income that has already been taxed by Uncle Sam. Many South Dakotans have witnessed this injustice firsthand – a friend, neighbor, or acquaintance who fell victim to the estate tax, also known as the death tax. Death shouldn’t be a taxable event, which is why I’m glad the Senate recently adopted my amendment to the Senate budget resolution calling on Congress to finally eliminate this destructive tax. I also recently introduced the Death Tax Repeal Act of 2015, which would permanently eliminate the death tax, with 27 of my colleagues.

Here in South Dakota, we are land rich and cash poor, leaving roughly one-third of South Dakota farms vulnerable to the death tax, based on cropland values provided by the U.S. Department of Agriculture. The death tax imposes a tax rate as high as 40 percent on family farms, ranches, and small businesses, which hurts economic growth by discouraging savings and development. A recent study by the non-partisan Tax Foundation found that repeal of the death tax would increase the U.S. capital stock by 2.2 percent, boost economic growth, and create 139,000 jobs.

We work hard daily to build a better life for our children, but the death tax only burdens them. It violates the basic premise of the American dream. Ninety-eight percent of farms in South Dakota are family owned and operated, and according to the South Dakota Department of Agriculture, over 2,500 South Dakota farms have been in the same family for more than 100 years. In some cases, families have to sell land just to pay the death tax, which punishes farmers and entrepreneurs for a lifetime of hard work.

By keeping more money in the hands of hard-working Americans, they will have a better opportunity to build a stronger economic future for their families and our country. In the U.S. Senate, I will continue to promote common-sense policies, like repealing the death tax, that give South Dakota farmers, ranchers, and small business owners the peace of mind of knowing that their hard-earned money will stay with their families, and not end up in the federal government’s coffers.

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41 thoughts on “US Senator John Thune’s Weekly Column: Working Toward Repealing Destructive and Unnecessary Death Tax”

  1. I am a good Republican but I cannot let this go unchallenged. Let’s be honest here.

    There is a 5.3 million dollar exemption before estate taxes even begin to be applied. If this does impact one third of farms, they are not small family farms. And there are very few South Dakotans that have “witnessed this injustice firsthand”. Certainly since the higher exemption of five million dollars took effect. That claim is simply not true.

    Most tax cuts will create jobs and this is no exception. But we all know that the wealthy can defer paying taxes on property or investments until they are sold. That means that they often do not pay on these holdings before the end of their life. So if they did not pay taxes on their growing estate while they were alive and their children do not have to pay after they are gone, when do they pay?

    I agree that we should keep “more money in the hands of hard-working Americans”. But Senator Thune knows that this does the opposite. It allows wealthy families to escape taxes for generation after generation and places an even greater burden on the rest of us.

    Now ask yourself if the Senator is representing you with this effort? I doubt it. Rarely does an estate exceed the exemption. There may not be more than a single reader of this blog that this impacts directly. Now ask yourself why this person is his priority… and not you?

    The Democrats love to claim that Republicans represent the wealthiest one percent. This effort benefits the richest .3 percent. Even worse.

    We would literally have billionaire families avoiding income and estate taxes while the kid scrubbing their yacht pays thousands to Uncle Sam year after year. Call that “class warfare” or “envy” if you want but that would be the reality if the Senator gets his way. That is not capitalism. That is ridiculous.

    1. Uh no.

      The federal estate tax does not apply when the estate is left to the surviving spouse.

      got it?

      1. Ah yes, a married couple can pass 10.6 with no tax. A spouse can transfer his/her credit when passing so when second spouse passes 10.6 + can pass to the kids with no estate tax. That’s 10.6 million.

        1. Could we have some numbers? Tell me how many South Dakota businesses or farms were forced to dissolve by this last year. My guess is zero but I am willing to see evidence to the contrary. I would think that very few even paid the tax at all.

          I dare you to tell the truth.

  2. “. But we all know that the wealthy can defer paying taxes on property or investments until they are sold. ”

    1. Property taxes are based on the marketable value of the land, so as the values goes up, so do the property taxes PAID.
    2. Where does the money come from to make those “investments”? A: From income, that has already been taxed.

    1. You ask: “Where does the money come from to make those “investments”? If you and our Senator have your way… from a tax-free inheritance.

  3. ” It allows wealthy families to escape taxes for generation after generation and places an even greater burden on the rest of us.”

    Just the opposite! Families who own lots of real property (that increases in value) LOWER the tax burden for those who live in smaller houses or apartments; and they pay for our schools!

    Enough with your ugly envy.

    1. There certainly is a lot of concern by a person here without great wealth, over the disposition of the great wealth of other private citizens. Government taxing power is abused when it’s the mechanism for the poor to retaliate against the rich. But for the government mechanism, we’d be talking theft or extortion. If I had more than forty acres and a mule in this state, I’d worry about that guy.

      1. The government taxing powers are abused when it’s the mechanism for the rich to burden the middle class. “Private” middle class persons nonetheless. That is what we are talking about here. And I think you know it.

        Aloof enough for you?

  4. “while the kid scrubbing their yacht pays thousands to Uncle Sam year after year”

    Under your scheme, the result would be that your po’ kid would be sitting in front of a TV/screen paid nothing to do nothing.

  5. “That is not capitalism”

    I agree.

    A scrub kid paying thousands in income taxes every year to the gov’t is not capitalism–it’s legalized theft.

    So is taking the yacht away from the yacht’s owner because you think it’s too much.

  6. “This effort benefits the richest .3 percent.”

    The death tax DISCOURAGES entrepreneurs.

    So, in that sense, eliminating the death tax benefits all of us since we can choose to be entrepreneurs, or work for them–a positive either way.

    1. My taxes “DISCOURAGE” investment too. All taxes do that.

      The Senator often says “death should not be a taxable event”. Clever line. But he forgets to add “for the wealthy”.

      Those of us without inheritances still pay taxes after the death of a loved one. They are called income taxes. Its hard to avoid paying taxes on a salary. Where is his concern?

  7. The death tax also DISCOURAGES further investment in a profitable adventure (whose value may be approaching the $5 million threshold); diverting those investment dollars into other investment vehicles in order to avoid the death tax; in doing so, the “wealthy” person is likely employ fewer people, or fewer highly skilled and rewarded people that she would otherwise employ in a booming business.

    Or, to use your jealous example–instead of buying a second yacht on the west coast and employing another scrub boy there to take care of it, the “wealthy” person would simply liquidate the first yacht, and gift the proceeds to a ne’er-do-well child, like the Kennedys do.

    So, the west-coast scrub boy is denied the job, and the opportunity to start his own yacht-scrubbing business that would employ scores of other young folks eager to start their own dreams.

    Instead, you want the gov’t to take that yacht and do what with it?

  8. Under my “scheme”, the wealthiest families would still pay taxes like I just did. God forbid. I refuse to drink this crazy “conservative” kool-aid.

    Taking a yacht away?? How about a little concern for the rest of us? The government takes a good chunk of my money every year but no, you say we shouldn’t touch Paris Hilton’s wealth or inheritance? But surely you realize that the rest of us have to pay taxes when our parents die. My salary is still taxed and my inheritance may be zero.

    I would like to invest more. I would like to create jobs. I would like to “pay more property taxes” by owning more land. I can’t because you want me to pay for Paris Hilton’s estate tax exemption. And, if you can’t tell, I don’t like it.

    The death tax discourages entrepreneurs? Well, why don’t you go all out and ban taxes on anyone earning billions? Oh. I guess that is pretty much what you are doing.

    (Way to post. You look like an army, Anonymous. Every two minutes or so.)

    1. “the wealthiest families would still pay taxes like I just did.”

      The wealthiest have more OPTIONS than you or I.

      If you think that increasing the estate tax rate or lowering the threshhold will result in more estate taxes paid, you’re mistaken. To avoid those increased taxes, the wealthy will alter their investments, and in all likelihood, it will not help create any jobs (except for another accountant).

      I posted a lot because you made so many statements that just are not accurate or unlikely to do as you suggest.

      ‘you say we shouldn’t touch Paris Hilton’s wealth or inheritance”

      Paris Hilton has created a business out of being little more than a “celebrity”.. Good for her. In doing so, instead of laying around eating bonbons, she has created a brand, employed people to develop & sell it, and made even more money for herself and her organization. GOOD FOR HER.

      Why are you so jealous?

      ” The government takes a good chunk of my money every year but no”

      Let’s lower your rates.

      “Taking a yacht away?? How about a little concern for the rest of us? ”

      See, that’s what you fail to appreciate–THAT YACHT does concern you, and for the better, because building, selling , & maintaining a yacht creates jobs for scrub boys and skilled builders and marinas. The fact that someone else has a yacht is a GOOD THING. The fact that someone has a yacht does not mean you have less.

      You do not PAY for her exemption, as if you or the gov;t has a right her family’s property at death or the fruit of her labors.

      You can invest more if you take chances or have a great idea.

      What I read is that you’re wasting your time in a jealous whine instead of getting off yer a$$ and doing it.

      We’re posting on a blog created and maintained by a SD guy who apparently makes some money at it, mostly though ads. I don’t think SD collects a sales tax on advertising. How the hell is he taking my money by not charging SD sales tax?

      In the end, VERY few people come to their wealth through inheritance. The VAST majority of wealthy folks in the US WORKED for it themselves.

      1. You say: “What I read is that you’re wasting your time in a jealous whine instead of getting off yer a$$ and doing it.”

        Ha. Why can’t you say that to children of the rich?

        You think that Republicans have to support every single stupid tax cut for the wealthy or we are envious traitors. Well, maybe you can look at the Citi Bank or Morrell worker and tell them that they have to pay taxes while billionaires do not, but I have a hard time with that. Does that make me jealous? Hardly.

        1. :Ha. Why can’t you say that to children of the rich? ”

          If they post here demanding that we take more from the rich (or the working class), I’ll engage them too.

          “You think that Republicans have to support every single stupid tax cut for the wealthy or we are envious traitors”

          No, that’s not what I think. I understand the appeal of this tax (“TAX THE RICH!”) and most other taxes (capital gains for example), but economics tells us something quite different. Taxing “them” rarely produces significant revenues until the tax becomes a tax on all of us.

          “Citi Bank or Morrell worker and tell them that they have to pay taxes while billionaires do not”

          Wage workers and billionaires pay taxes. In fact, 84% of income taxes are paid by the top 20% of filers in 2014.The top 1% of filers pay 46% of income taxes.

          http://www.wsj.com/articles/top-20-of-earners-pay-84-of-income-tax-1428674384

          But, I doubt much of this makes any difference to you. When emotions overwhelm economic reality, the facts do not matter, right?

          1. You say: “Wage workers and billionaires pay taxes. In fact, 84% of income taxes are paid by the top 20% of filers in 2014”.

            I know, I am one of them. But if you have your way, the tax burden on super-rich families will shrink to nothing. They, in particular, have the ability to defer taxes quite easily. But I am not so lucky.

            So, thank you for that.

            And as for “emotions”. Who is using death and bereavement as an excuse for eliminating taxes on the rich? Hmmm?

            1. You say: “Wage workers and billionaires pay taxes. In fact, 84% of income taxes are paid by the top 20% of filers in 2014″.

              “I know, I am one of them.”

              One of what?

              The 20% who pay 84% of income taxes?

              Or one of those in the lowest 80% who pay a measly 16% of income taxes collected?

              If you want true “fairness”, you would be arguing that the lowest 80% should have their rates RAISED so as to increase their pitiful 16% share to something higher!!!

              How is 80% of taxpayers paying ONLY 16% of income taxes anywhere close to “fair”?

              Give it up man.

              1. Yes, Mr. Cheerful, I am in the 20% who pay those taxes. But we are talking about the super-wealthy here. That .3 percent. The wealthiest. The ones who can avoid taxes to begin with. Not saps like me who cannot avoid them.

                1. “But we are talking about the super-wealthy here. That .3 percent.”

                  The top 1% of earners pay 38% of the income tax? That’s 38 TIMES their relative wealth.

                  The top 0.1% paid 16% of the income tax–that’s 160 TIMES their relative position as earners!

                  Is that fair enough for you?

                  Is that fair enough?

                  Hello??

          2. You say: “Taxing “them” rarely produces significant revenues until the tax becomes a tax on all of us.”

            I thought you were claiming that the rich paid all the taxes. Pick a side, man.

            1. “I thought you were claiming that the rich paid all the taxes. Pick a side, man.”

              No, I pointed out that high earners pay much of the income tax.

              Income tax is only one tax of many that the wealthy pay.

              1. No, the income tax is one tax that the wealthy SOMETIMES pay. (See deferred income taxes.) Another is the estate tax. Well, not for long if you have your way.

                And I have a question. Just who is asking for this 5.3/10.6 million exemption to be raised anyway? How many genuine letters does the Senator get begging him to raise that?

                1. “No, the income tax is one tax that the wealthy SOMETIMES pay.”

                  Actually, they pay it, and pay 84% of the income tax collections….as I’ve substantiated.

                  Now, if you’re claiming that paying 84% of income tax is unfair and they should pay even more, then you’ve stretched “fair” beyond recognition, losing all credibility.

    2. Anon 5:24 you nail it. The ultra rich already have ways to avoid the inheritance tax, the lesser-rich and merely-very-well-off don’t have those ways. So to continue to punitively tax the upper middle class because it’s all the closer you can get to the filthy ultra rich who you can’t touch, that’s very near to being a shill and a toad for the filthy ultra rich. Rising water floats all boats; class warfare tax policy chains the boat to remain under the surface.

  9. “I refuse to drink this crazy “conservative” kool-aid.”

    it’s not crazy, Kool-Aid, or conservative.

    It’s BASIC ECONOMICS. Your view is so narrow (us v. them) that you fail to appreciate how taxes utterly BURDEN an economy for ALL. (which is not to say that some taxes are necessary, but the estate tax is so miniscule in terms of revenues to the gov’t (and any changes like increased rates or decreased threshholds WILL NOT change that), that is boils down to an argument based on little other than jealousy,.

  10. I am the least jealous person you can imagine. Nice try.

    Middle income taxpayers like myself want a revenue system that is fair. Oh no. Did I say “fair”? To you, that must be code for envy or something.

    That tired old “class warfare” charge doesn’t work when its just common sense that these huge estates need to continue to pay these taxes. You know perfectly well that they defer taxes and without the estate tax they can avoid taxes for their children and grandchildren and great-grandchildren etc. On and on.

    I voted for Senator Thune and I expect him to represent all of us. Instead, here he is tripping over himself to represent the .3 percent of the richest at our expense. Somebody is going to pay these taxes.

    1. “Middle income taxpayers like myself want a revenue system that is fair. Oh no. Did I say “fair”? To you, that must be code for envy or something. ”

      Now, we see your problem.

      Yes, “fair” is code for jealousy. That is precisely the word that Obama used when he met Joe the Plumber and when he spoke with Charlie Gibson in 2008. As Obama was calling for an increase in the capital gains tax rate, Gibson pointed out that whenever the capital gains tax rate was INCREASED, capital gains revenues DECREASED!

      April, 2008:

      GIBSON: All right. You have, however, said you would favor an increase in the capital gains tax. As a matter of fact, you said on CNBC, and I quote, “I certainly would not go above what existed under Bill Clinton,” which was 28 percent. It’s now 15 percent. That’s almost a doubling, if you went to 28 percent.

      But actually, Bill Clinton, in 1997, signed legislation that dropped the capital gains tax to 20 percent.

      OBAMA: Right.

      GIBSON: And George Bush has taken it down to 15 percent.

      OBAMA: Right.

      GIBSON: And in each instance, when the rate dropped, revenues from the tax increased; the government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down.

      So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?

      OBAMA: Well, Charlie, what I’ve said is that I would look at raising the capital gains tax for purposes of fairness.

      What you’re missing is this: by eliminating the estate tax, it is likely that OTHER tax revenues will INCREASE because those with the wealth are more likely to invest in new ventures to increase their wealth, and spend as they choose. In doing so, more jobs will be created and filled by common folks who will pay more income and payroll taxes, more sales taxes collected, and more luxury taxes on yachts and caviar will be collected. Btw, in terms of yachts and other luxury goods, GHW Bush signed an 10% luxury surtax that went into effect in 1991. By 1993, Clinton and his Democrat house & senate repealed it because it brought in HALF of the projected revenues, destroyed hundreds of jobs thereby INCREASING unemployment expenditures, and lowered the incomes of the sellers of those “luxury” items who survived thereby resulting in less income tax paid by them!

      “Somebody is going to pay these taxes”

      No. Someone is going to avoid paying those taxes, and in doing so, burden the economy (“lost opportunity costs”) while doing nothing for tax revenues.

      Your jealously is overshadowing the cold, hard, economic facts.

      1. Do you ever comment without an ad hominem attack? I could be a sensitive guy you know.

          1. Take the Pope. He is a lot more liberal than I am. But I wouldn’t call him jealous. You know that appealing for equity is not equal to envy. You just don’t want to admit it.

            1. If your admonitions that we need to keep the death tax in the name of “fairness”, yet it does not raise revenues as intended (as I’ve thoroughly substantiated with FACTS), then the ONLY conclusion left is that your sense of “fairness” is rooted in an emotion called jealousy.

              And jealousy is truly UNFAIR.

      2. I will stick with “fair” if you want to go with “unfair”. I think it fits the both of us.

        1. How is raising rates on estate, income, capital gains, or luxury taxes , but collecting less revenue (as is the rule), in any sense “fair”?

          If your goal is to increase tax revenues (which may be necessary), then one must understand the economics and human behavior. Considerations of “fair” have no place in that discussion because it’s overly subjective, and unlikely to have anything to do with increasing revenues.

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