The White House cited research from a “family business” group to support its push for repealing the federal estate tax. But don’t mistake family business owners for small business owners.
Directors of the group, called Family Enterprise USA, include Preston Root. His family fortune derives from creating the curvy green bottle that Coca-Cola made iconic a century ago. Another board member, Jamie Richardson, married into the hamburger business. Specifically: sliders. His wife is the great-granddaughter of the man who founded the White Castle fast-food chain.
Members of the little-known nonprofit, which appeared in a White House email this month, say they represent the people the estate tax hurts most—family-owned businesses that they say are taxed in an unfair and intrusive way.
“No one is opposed to paying their fair share of taxes,” Root said in an interview. The estate tax, however, hits families at the worst possible time, when someone has died. “It's about timing,” he said.
The fate of the estate tax—a debate that has dominated Washington for years—remains unclear less than 48 hours before House Republicans release the text of a planned tax-overhaul bill. Pat Soldano, another Family Enterprise board member, said she thinks the House bill will include a repeal provision—but the Senate may change that.
Regardless, the debate may come back to one central fact: Just two out of every 1,000 Americans who die end up with an estate tax bill. If you’re single and you die with less than $5.49 million to your name, you—or, rather your heirs—don’t have to worry. Couples can shield $10.98 million from the estate tax, and the right planning can shield millions more. The official rate is 40 percent, though IRS data show the effective tax rate is more like 17 percent.
Though its repeal has been central to Republican tax philosophy for years, some GOP senators, including Susan Collins of Maine, have expressed skepticism about ending the tax, which brought in $18 billion last year. Keeping it could help offset the deep business and individual income-tax rate cuts Republicans want.
Democrats, meanwhile, are ready to portray an estate-tax repeal as a giveaway to the rich at a time of surging wealth inequality. The top 0.1 percent controlled just 7 percent of U.S. wealth in 1978, according to Emmanuel Saez and Gabriel Zucman, economists at the University of California at Berkeley. By 2012, that group controlled 22 percent of wealth.
“If anything, I think we should be strengthening the estate tax,” said New York University professor Lily Batchelder, who worked in former President Barack Obama’s administration. “It’s the most progressive tax we have.”
The Trump administration says the estate tax hurts the economy. In an email this month, it cited research from Family Enterprise USA to say that “close to 20 percent of family business owners say planning for the death tax affects their ability to create jobs.”