As President-Elect Trump unfolds his plans for presidency, tax reform is top of the list. Although many have tried, could Trump repeal the estate tax? According to Jim Rein of KCOE ISOM, he wants to, but having enough votes will require bi-partisan effort from Congress.
“The Trump administration desires to repeal the estate tax,” Rein says. “The repeal of the estate tax actually came up three different times under the Bush administration when it was a Republican controlled Congress and a Republican president, and was defeated three times.”
To get the estate tax repealed it will literally take an act of Congress. Although Republicans have a slight majority in both the House and Senate, they won’t have enough Republican votes alone to push a reform like that through.
“It will be interesting to see if others will, as they say ‘reach across the isle’ [to pass the bill],” Rein says. “That’s going to have to happen for it to be repealed in full.”
Whether or not the Trump administration is able to repeal the estate tax, Rein doesn’t expect the historically high exemption levels to be lowered.
“The exemption today is $5.45 million and $5.49 million in January,” he says. “I would suspect even if they aren’t able to repeal the estate tax we will still see these fairly high levels of exemption and keep the rates fairly even or consistent with where they are today.”
Should repeal happen, Rein says all eyes are on how the step up in basis is implemented.
“We’ve seen proposals in the past where if the estate tax is repealed, the step up in basis is not offered as an offset, if you will,” he explains. “So then there’s an income tax component on these heirs as they sell those assets.”
Rein says a bill to repeal the estate tax made appearance in Congress as recently as last spring, but never passed the House.
Listen to Rein’s full interview with AgriTalk host Mike Adams above.