Final bill raises threshold for estate tax rather than eliminating it
As a presidential candidate, Donald Trump set his sights on eliminating the estate tax. "No family will have to pay the death tax," his campaign's tax proposal said.
On Dec. 19 and 20, the Senate and the House passed a final version of the tax bill, which will go to the president for his signature. Let's take a look at how the final bill treated the estate tax.
The estate tax comes into play when someone dies and the estate is large enough to qualify for the tax. Under existing law, it essentially affects only individuals and families with significant assets.
In 2017, estates worth less than $5.49 million are exempt from the tax, according to the Urban Institute-Brookings Institution Tax Policy Center. Above $5.49 million, the estate is generally taxed at 40 percent. Family-owned farms and closely-held businesses may be able to pay less or pay in low-interest installments.
For 2017, the Tax Policy Center said that "after allowing for deductions and credits, 5,460 estates will owe tax," the center concluded.
The initial tax bill that passed the House did eliminate the estate tax, but the Senate's bill did not, instead raising the dollar amount that is exempt from the tax.
The final version of the tax bill kept the estate tax in place but increased the amount to be shielded from the tax. Under the new provision, the tax will affect estates of at least $11.2 million, or $22.4 million for couples. The provision is poised to sunset after 2025.
The increased exemption level means that fewer estates than ever will be hit by the tax, which is progress toward "no family" having to pay the estate tax. But it's not all the way there. We rate this promise a Compromise.
PolitiFact, "Who wins and who loses from the tax bill?" Dec. 19, 2017
PolitiFact, "Donald Trump's Pants on Fire claim about the estate tax, small businesses and farms," Sept. 28, 2017
Urban Institute-Brookings Institution Tax Policy Center, "Analysis of the Tax Cuts and Jobs Act," accessed Dec. 20, 2017
Email interview with Patrick Newton, spokesman for the Committee for a Responsible Federal Budget, Dec. 19, 2017
Trump reiterates intention to end the estate tax
As a presidential candidate, Donald Trump promised to eliminate the estate tax -- the tax levied on the largest inheritances. As president, Trump has now offered two tangible pieces of evidence that this proposal remains on the front burner.
First, Trump included elimination of the estate tax among the bullet points in a one-page summary of principles for his upcoming tax legislation. That document was released on April 26.
That position was included again when his administration released its fiscal 2018 budget proposal on May 23.
In both documents, he called the estate tax the "death tax" -- terminology that critics say is substantially misleading, since it suggests that everyone who dies pays it. In reality, the tax kicks in at such a high wealth threshold, and it has enough exceptions, that only the very richest Americans ever pay it.
There is no actual tax legislation yet to carry out Trump's priorities, and Congress will have to pass measures before Trump can sign them into law. Still, his moves so far are enough to shift this promise to In the Works.