US House of Representatives votes to repeal estate tax
The House of Representatives voted on April 16 in favor of a Republican-led bill to repeal the federal estate tax in its entirety. The bill was introduced by the Ways and Means Committee on March 25.
The 40 percent tax applies to inherited assets worth USD5.4 million or more (USD10.86 million for couples). The estate tax currently only applies to 5,400 estates or 0.2 percent of US taxpayers but it is argued that if it were to be repealed it would cost the government USD269 billion over the next ten years.
Commentators argue that the Death Tax Repeal Act of 2015 is expected to be blocked at the Senate by the Democrats and it is reported that it is also unlikely to get the two-thirds majority it needs to override a veto.
President Obama not only opposes the repeal of the so-called "death tax", he intends to increase it. Furthermore, in his State of the Union address on January 20, he stated his intention to close the "stepped-up basis" whereby capital gains on assets held until death are never subject to income taxes allowing heirs to avoid capital gains tax on large inheritances.
According to Tax Trends Weekly the majority of Americans oppose the tax which "costs the economy over USD1 trillion in capital accumulation".
- STEP news story (20 January 2015): President Obama announces plans to close tax loopholes
- The Hill
- Huffington Post
- Wealth Management
- Tax Trends Weekly (via Market Wired)
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