I am not the first person President Trump or his economic team looks to for advice on tax reform. But if they wanted some, this is the free advice I’d give them: Don’t cut or eliminate the estate tax—raise it.
Repealing the estate tax—a tax on assets transferred from a deceased individual to their heirs—has become a staple cause among conservative Republicans. Eleven Republican candidates explicitly called for its elimination during the 2016 election. By calling it a “death tax,” and implying that it would hurt tens of millions of ordinary families, and force the sale of long-held family farms and family businesses, Republicans have successfully cast the estate tax as a ubiquitous and pernicious burden. That’s helped them win the public-relations battle over it so far.
The problem is that the main talking points that conservatives rely on when making this case are untrue. After years of looking, estate-tax repealers have not been able to come forward with even a handful of farms that, due to the estate tax, were forcibly sold off. And the notion that the estate tax somehow inhibits middle-class Americans from passing down savings to their heirs now, more than ever, falls somewhere between a hoax and a joke: The estate tax today kicks in at about $5.5 million for an individual, or $11 million for a couple. That means that there is a zero percent estate tax for every family estate under $11 million. A married couple that managed to save and leave $10.9 million to their children would not pay a single penny.