Doubling estate tax exemption to help Alaska's richest fishermen and other tax cut tales yet to be told
The New York Times had a good piece the other day about Republicans worried that with the stable GOP genius leading them into the 2018 elections, his abusive remarks and daily distractions are reducing their chances of keeping control of Congress.
Republicans say they should be talking nonstop about the virtues of their giant tax cut bill. This apparently led House Speaker Paul Ryan to highlight the secretary whose weekly check showed a gigantic $1.50 increase.
Alaskans would benefit if Sens. Lisa Murkowski, Dan Sullivan and Rep. Don Young offered the full story of the tax cuts, not the misleading version they are peddling that it is all about helping the middle class.
Alaska newspapers have already moved onto other things after failing to offer much in the way of critical analysis or commentary on this landmark law. Many important details have escaped public attention.
The bill, packed with special interest giveaways, was rushed to completion without public hearings or scrutiny by outside experts, all to meet an arbitrary deadline.
I plan to keep writing about this in the weeks and months ahead, reviewing the GOP claims that the temporary personal income tax break—a small one for middle class families—justifies the permanent corporate tax cut and the $1.5 trillion addition to the deficit.
One of the provisions in the law—aimed entirely at rich families—doubles the amount of income that can be sheltered from the estate tax.
Murkowski said Alaska fishermen need this exemption, apparently because the ability for a couple to bequeath $10.98 million in net worth without the estate paying a penny in taxes was burdensome. A single fisherman could only pass along $5.49 million without any tax on the estate.
But rich fishermen can breathe easy. The tax bill increases the exemption to $11 million for a single person and $22 million for a couple. Estates worth more than that are subject to a 40 percent tax, though the whole industry of estate planning is targeted at cutting the amounts paid.
"There has been a lot of discussion about the benefits that is seen with this particular provision for our farmers," Murkowski said during the tax bill debate. "In Alaska, we don't have a big agriculture section of our state, but we view our fishermen, really, as the famers or the ranchers of the sea——truly small businessmen."
She said fishing families that have investments worth $7 million or $8 million should be allowed to pass all of that to descendants without paying any taxes. Allowing a fisherman to bequeath $11 million in assets or allowing a couple to pass along $22 million without a tax would "provide just a little bit of relief to those smaller families," she said.
Murkowski sounded as if she didn't believe the "relief" argument she was making. I don't believe it either. She didn't provide any statistics about the burdensome estate tax on Alaska's "ranchers of the sea" because she had none.
The exemption increase is a gift to the heirs of rich families. Instead of two out of every 1,000 estates paying estate taxes, fewer than 1 in 1,000 would now have to pay, according to the Tax Policy Center.
The Joint Committee on Taxation estimated that the number of estates that would have to pay tax under the new bill would be 1,800 this year, down from about 5,000 under the old law. My guess is that the Alaska fishermen Murkowski mentioned are few and far between.
The Republicans created a fable that increasing the exemption was all about saving small businesses and family farms, though the facts contradict that claim.
The Congressional Research Service said that "only a small share of these decedents would be
affected" by the doubling of the exemption, which is to last until 2025. About three-quarters of the money collected in the estate tax is from the top 1 percent, the research service said.
The estate tax provision had nothing to do with the middle class and little to do with Alaska's fishermen. It fit right into the pattern of a tax bill aimed at helping rich people more than anyone else.
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