The Senate GOP plan to preserve the Bush tax cuts on incomes above $250,000 already amounts to a budget-busting tax cut for the rich, and in addition to it, Minority Leader Mitch McConnell (R-KY) and Sen. Orrin Hatch (R-UT) also added another tax cut that benefits only the super-wealthy. The Hatch-McConnell plan effectively eliminates the estate tax, costing billions in revenue and giving a huge tax cut to the very wealthiest Americans, as the Center on Budget and Policy Priorities notes:
Specifically, the new Senate Republican proposal, which Senators Mitch McConnell and Orrin Hatch unveiled earlier this month, would:
Cost $119 billion more in forgone revenues over the next ten years than the Obama Administration proposal to reinstate the already generous 2009 estate-tax rules. Analysis by the Urban Institute-Brookings Tax Policy Center shows that all of the $119 billion would flow to the heirs of the estates of the wealthiest three of every 1,000 people who die, since those are the only estates that would owe any estate tax under the 2009 rules.
Give taxable estates an average of more than $1.1 million each in tax reductions, compared to the tax that would be owed under a reinstatement of the 2009 estate-tax rules. The bigger the estate, the more lavish the tax break would be. Estates worth more than $20 million would receive an average tax reduction of $4.2 million in 2013.
As CBPP notes, even President Obama’s estate tax plan is generous, allowing exemptions on millions of dollars of an estate’s value. The GOP’s plan would provide an even larger exemption, and though critics of the tax claim the estate has already been subject to taxation, in most instances it is not because the increase in value of the estate classifies as unrealized capital gains. If the estate was sold, the increase in value would be taxed. When it is inherited, however, those taxes are never levied.
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