Vice President Kamala Harris’ proposed tax plan has raised significant concerns about the potential impact on family businesses and farms, particularly with the potential for a drastic increase in the ‘death tax’. The American Business Defense Foundation reports that under Harris’ plan, the number of Americans subject to the death tax could double or even triple. This would occur because she has pledged to let the Trump tax cuts expire, which currently exempts estates worth roughly $13.6 million from taxation. However, under the 2017 tax reform, this exemption is set to revert to the pre-2018 level of $5 million, adjusted for inflation, by 2026.
While Harris advocates for her plan as a way to ‘soak the millionaires and billionaires,’ its consequences extend far beyond those at the top. Thousands of families could be burdened by this tax upon the passing of a parent, forcing them to sell their hard-earned assets, such as farms and businesses, to pay the exorbitant tax burden. This isn’t about targeting the ultra-wealthy like Warren Buffett or Bill Gates, who have already established tax shelters to escape the death tax. Instead, it threatens the very core of the American dream, impacting families who have built their businesses and legacies over generations.
The current death tax rate is already a hefty 40%, with additional state taxes ranging from 5% to 15%, effectively siphoning away almost half of a family’s inheritance. It’s not just about the financial burden; it’s about the sheer unfairness of the government taking a significant portion of a family’s inheritance, while the IRS gets a larger share of the estate than the surviving family members.
Senator Elizabeth Warren, a fellow Democrat, has proposed an even more extreme bill that would increase the estate tax rate to a staggering 55% to 65%, with an exemption reduced to $3.5 million. This means that up to two-thirds of an estate could be confiscated by the government. Harris has expressed support for this proposal, further exacerbating the threat to family businesses and farms.
This isn’t simply taxation; it’s outright confiscation of family property. Imagine the government seizing Grandma’s cherished jewelry or Grandpa’s hard-earned homestead. Will family businesses be forced into fire sales to vulture companies simply to meet the IRS’s demands?
The potential consequences of such extreme tax policies are deeply concerning. It could lead to a situation where the United States, the land of the free, would have the highest estate tax in the world, exceeding even the rates in Russia, China, and socialist European nations.
This level of taxation could incentivize older individuals to spend down their estates to avoid the death tax, effectively leading them to die broke. Family businesses would face significant challenges in transferring ownership to future generations, jeopardizing job creation and investment.
In stark contrast, former President Trump’s tax policies, which included significant relief for the death tax, aimed to protect family businesses and legacies, ensuring their vibrancy and long-term sustainability. This is a critical issue for voters to consider as they weigh the potential impact of these vastly different economic policies on their families, businesses, and the future of the American dream.