WASHINGTON — President-elect Donald Trump, who won the hearts and minds of millions of working-class voters, may help deliver a multibillion-dollar bonanza to America’s wealthiest families.
The Manhattan businessman’s election offers congressional Republicans their best chance in years to eliminate the estate tax, which he and others call the “death tax.” Abolishing it would save more than $20 billion a year for the millionaires and billionaires the tax applies to — including the Trump family and several of the people he has chosen for his administration.
Wiping out the estate tax has been a longstanding goal for Republican lawmakers, and the party’s sweeping victories in the 2016 election have brought them thrillingly close to achieving it. But there are potential stumbling blocks. Their narrow margin in the Senate leaves few votes to spare. And Trump may have a hard time reconciling his populist campaign themes with a tax break for America’s richest.
Under federal law, the tax, which is levied at a 40 percent rate, applies only to estates worth more than $5.45 million for individuals and $10.9 million for couples. Estates worth less than that may be passed on to heirs tax-free. Last year, just 0.2 percent of estates of people who died were subject to the tax, according to estimates by the Tax Policy Center, a Washington-based research group that’s a joint venture of the Urban Institute and the Brookings Institution.
Trump “campaigned as someone who’s going to help the middle class, the forgotten guy, but every policy he’s advocating — huge tax cuts for the wealthy, estate tax — all for the top .001 percent,” said Rep. Jerry Nadler, a Democrat from Manhattan.
Trump’s estate would save $564 million, based on his estimated net worth of $3 billion. Trump disagrees with that net-worth estimate, which Bloomberg News compiled in July; he has said his net worth exceeds $10 billion. If so, his savings would increase — to as much as $1.9 billion at an 18.8 percent effective tax rate.
The looming estate-tax debate may be an early test of how Republicans deal with the electorate’s populist-over-elite mood. In interviews, Republican senators and congressmen played down tension between Trump’s populist image and repeal of the estate tax. GOP aides said many are waiting for guidance from Trump. Some conservatives caution that upper-end tax breaks are politically problematic.
Democrats overwhelmingly oppose reducing the tax — presidential nominee Hillary Clinton campaigned on raising its rate to 65 percent for couples worth $1 billion. “I’m against” repealing the tax, said incoming Senate Minority Leader Chuck Schumer. “To do it would sure help out the wealthiest few in America.”
The politics of repeal may depend on which description of the tax reaches the public. A Gallup poll in March found that 54 percent of Americans favored eliminating it when told it’s a tax paid when a person dies. But researchers have found that people are more likely to support it — and to want it to be increased — when told who it affects.
“It becomes a question of how effective Democrats are at reframing that issue beyond this notion of a death tax,” said Norman Ornstein of the American Enterprise Institute.