In an Oct. 18, 2017, appearance on a talk show on Janesville’s WCLO radio, Pocan said:
They (Republicans) go about getting rid of the estate tax -- which, to me, is the one that I wish more people would really understand. They’ve done a good of marketing it as a "death tax" -- you die and you get taxed. But the reality is, it’s a tax on the ultra-wealthy that the vast majority of people will never, ever, ever see in their life. Last year, two out of every 1,000 people paid an estate tax. So it’s not like a common tax that’s out there.
Aimed at the rich?
There is debate about how the rich are treated by the reform proposal, which at this stage is considered only a framework, since it lacks details.
We’ve rated as Mostly False a claim by House Speaker Paul Ryan, a Janesville Republican who represents the congressional district that borders Pocan’s. Ryan said the framework, which he supports, is focused on tax breaks for the middle class "and not about people who are really high-income earners getting a tax break." The framework does offer some benefits for the middle class, but what’s more clear is there are specific provisions benefiting the wealthy.
Trump himself claimed ending the tax would "protect millions of small businesses and the American farmer." But PolitiFact National’s rating was Pants on Fire: Only 5,460 estates even pay the tax each year, with only 80 being small businesses or farms.
The Internal Revenue Service tells us the estate tax "is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death" -- including cash and securities, real estate, insurance, trusts, business interests and other assets.
In 2016, the year cited in Pocan’s claim, an unmarried individual’s estate was potentially taxable only if the estate’s value exceeded $5.45 million. (The value had to exceed $10.9 million to be taxable, if there was a surviving spouse.) After deductions, such estates generally are taxed at 40 percent.
IRS figures show there were 12,411 estate tax returns filed in 2016 -- but a tax was owed on only 5,219 of them. That smaller figure aligns with what PolitiFact National found. And the non-profit Urban Institute-Brookings Institution Tax Policy Center makes a similar estimate for 2017: 5,460 estates owing a tax.)
In 2016, those 5,219 estates paid a total estate tax of $18.3 billion.
Since annual estate tax filings include deaths that occur in previous years, the Tax Policy Center says that each year, there are roughly 5,000 estates that pay the federal estate tax out of roughly 2.6 million deaths each year.
That comes to 2 of every 1,000.
Point of view on the tax
While he doesn’t dispute the statistics, Chris Edwards, director of tax policy studies at the libertarian-leaning Cato Institute, told us there are other points to consider regarding the estate tax, saying:
The estate tax affects far more people than the relatively small number who pay. Many people who own businesses and/or investments have to spend a lot of time and money on lawyers/accountants planning to avoid it. A substantial portion of the life insurance industry exists only to avoid the estate tax. And, indeed, that is an important criticism: it is one of the most inefficient taxes in the sense that the ratio of paperwork/avoidance to tax collections is very high ….
The estate tax is anti-saving and anti-investment. It encourages wealthy folks to consume their wealth before death because, if the rate is high, they don’t want the government to grab it. For the rest of us, it would be better if wealthy people kept their money invested in the economy, because that spurs growth. It’s better for us if the wealthy hold large pools of savings rather than going out and buying expensive cars and yachts. A high estate tax rate encourages them to go out and buy expensive cars and yachts, which does nothing for long term economic growth.
Pocan says that what Republicans call the "death tax" is the estate tax "on the ultra wealthy" which, in 2016, was paid by only "two out of every 1,000 people."
Republicans who are proposing to eliminate the estate tax do use the "death tax" term. In 2016, the tax, generally 40 percent, applied only to estates worth $5.45 million or more. After deductions, the tax was paid by only about two out of every 1,000 people who died.
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WCLO.com, Mark Pocan interview (4:15), Oct. 18, 2017
Email, Mark Pocan spokesman Ron Boehmer, Oct. 23, 2017
Email, Tax Policy Center senior research associate Joseph Rosenberg, Oct. 26, 2017
Money, "How Many People Pay the Estate Tax?" Aug. 9, 2016
U.S. Treasury, tax reform framework press release, Sept. 27, 2017
PolitiFact National, "Donald Trump's Pants on Fire claim about the estate tax, small businesses and farms," Sept. 28, 2017
Email, Chris Edwards, director of tax policy studies at the libertarian-leaning Cato Institute, Oct. 21, 2017
Center on Budget and Policy Priorities, "Ten Facts You Should Know About the Federal Estate Tax," May 5, 2017
FactCheck.org, "‘Death Tax’ Talking Point Won’t Die," Sept. 27, 2017
Tax Policy Center, "How do the estate, gift, and generation-skipping transfer taxes work?" accessed Oct. 25, 2017
IRS, "Estate tax," Oct. 23, 2017
IRS, estate tax statistics for 2016, accessed Oct. 25, 2017
Bloomberg BNA, "Effective Estate Tax Down in 2016 Returns, Spousal Bequests Up," Oct. 11, 2017
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