The House voted to repeal the estate tax Thursday, a move the Republican majority argued will aid the economy and spare family-run businesses but harshly criticized by President Obama as a giveaway to wealthy people.
The House voted 240-179 to pass the legislation, introduced by Rep. Kevin Brady, R-Texas.
Following the bill’s passage, House Ways and Means Committee chairman Paul Ryan said that “when a family is dealing with the loss of a loved one, the last thing they should have to worry about is the federal government coming in and undercutting their livelihood.”
The Obama administration already threatened a veto of the legislation, arguing that it would be fiscally irresponsible and regressive.
The Joint Committee on Taxation estimated that the bill would lower government revenue by nearly $270 billion over 10 years, benefiting 5,500 households.
“Repealing the estate tax would surely sow the seeds of a permanent aristocracy in this country,” Rep. Jim McDermott, D-Wash., said Thursday on the House floor.
In the Senate, where the bill is sponsored by Republican John Thune of South Dakota, the estate tax repeal would face a number of obstacles.
In a test vote on repealing the estate tax in March, 54 senators, including Democrat Joe Manchin of West Virginia, voted in favor. That is short of the 60 that would be required to overcome a filibuster.
Republicans favor repealing the tax on fairness grounds, arguing that it ruins families’ life works.
Calling it a “death tax,” Brady and House Majority Whip Steve Scalise of Louisiana wrote in USA Today Thursday that it “is an immoral tax and an attack on the American dream.”
The 40 percent tax, with a $5.5 million exemption for individuals and $11 million for couples, can threaten some families’ ability to pass down ranches, farms or small business to the next generation.
The Republican bill would retain a feature of the tax code that prevents heirs from being taxed on the increase on assets that occurred during the decedent’s life. This feature, called the step up in basis, or the “trust fund loophole” by Democrats, effectively leaves some capital gains untaxed. By leaving it in place while eliminating the estate tax, Republicans would remove two levels of taxation on capital.
Seven Democrats voted for the repeal bill Thursday, including Sanford Bishop of Georgia, one of the measure’s early supporters.
Three Republicans voted against it: David Jolly of Florida, Walter Jones of North Carolina, Scott Rigell of Virginia
