Despite being one of the more unpopular policies in America, the death tax is set to be resurrected on January 1st. How high it will ultimately rise remains to be seen. If the tax deal passes, it will return at a 35% rate and a $5 million exemption. While not good, that’s certainly better than the 55% rate and $1 million exemption we’ll see if the deal fails. Still, both rates would mean disaster for family businesses and farms.
The hard left has inexplicably decided that not pushing hard enough for excessive taxation without respiration is where they draw the line in the sand. Nancy Pelosi referred to any deal that would lesson the fleecing of Americans upon death as “a bridge too far.” Others have referred to its inclusion in the tax deal as “gratuitous.” That’s funny, given how apt the word describes the tax itself.
What are we to make of this inexplicable drive for such an unpopular policy? One explanation is that the left simply holds a profoundly distorted view of social fairness. Rather than seek equality before the law, they look to government to enforce equality of outcomes. But other forces might be at work as well.
Another possible explanation comes courtesy of a new issue brief by the American Family Business Foundation, which highlights the cozy relationship between the life insurance industry and big government. Because life insurance benefits are untaxed, even an overpriced plan can result in more money being passed on to heirs than a simple bequeathal. The life insurance industry benefits heavily from this arrangement, with an estimated $12.5 billion in revenue coming due to estate planning. Without a death tax, much of this revenue would be lost, making the $50 million per year spent on lobbying by the industry seem like a bargain.
When the death tax was phased out temporarily, the industry went to work fighting to ensure it would rise again. This is their customers money they are spending in order to promote higher taxes, which will then force those taxpayers to purchase their product if they want to fulfill the basic human desire of providing their children. Their work is now about to pay off. And this is where the left draws their line in the sand?
To add insult to injury, the very same elites who want to rob the graves of the newly departed will get a gratuity, courtesy of US taxpayers, should they die in office. Known as the death gratuity, this benefit consists of a payout equal to one year’s worth of their bloated salary to the family of a member of Congress that dies in office. So while American farmers are struggling to find a way to pay a gratuitous death tax without selling off their property, the families of the likes of Senators Kennedy and Byrd get gratuity checks of $174,000 or more. Where is Bernie Sanders to ask when enough is enough for these political elites?
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