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2019 Outlook: Estate Tax Foes and Friends Prepare for a Fight

Dec. 27, 2018, 1:31 PM

Policy groups on both sides of the estate tax are readying to battle over the issue, which could play a central role in the 2020 presidential election.

Anti-estate tax groups “are re-energizing,” said Patricia Wolff, senior director of congressional relations at the American Farm Bureau Federation, a group that supports full repeal of the tax. While industry groups were active on the estate tax during the lead-up to passage of the 2017 tax law, it couldn’t be the sole focus because there were other issues the groups worried about, she said.

“Now that tax reform has passed and we’re in a position where we have to work to make the exemption permanent, groups are re-engaging,” she said.

It’s unlikely Congress will make any changes to the estate tax over the next two years because Democrats control the House and Republicans control the Senate. Still, the foundation that groups lay now will play an important role in influencing the messaging on the issue in the 2020 presidential race.

“The estate tax issue will be over-politicized as it always is with a presidential election on the horizon,” said Palmer Schoening, chairman of the Family Business Coalition (FBC), which supports repealing the tax. “One of the president’s biggest applause lines during rallies comes when he talks about killing the death tax.”

In 2018, an individual can pass up to $11.18 million without paying estate tax at death, and a married couple can pass twice that at $22.36 million because of changes made in the 2017 tax law. That’s double the amount they would have been able to transfer under the old tax code. The higher exemption amount expires after 2025.

‘Continue the Fight’

Anti-estate tax groups aren’t the only ones preparing for battle.

Morris Pearl, chair of Patriotic Millionaires, said his organization, which supports higher estate taxes, will urge the Democrat-controlled House to be more progressive on tax policy—even if the Senate ultimately rejects their ideas.

Rolling back the estate tax exemption is part of that broader effort. House Democrats “should challenge the Senate,” he said. “We should at least continue the fight.”

Groups in favor of getting rid of the estate tax altogether will focus on urging lawmakers to make permanent the higher estate tax exemption amounts and preventing them from increasing the tax to fund other priorities like infrastructure and middle-class tax relief, Wolff said.

Potential 2020 presidential contender Sen. Cory Booker (D-N.J.) in October introduced the American Opportunity Account Act, which would create a savings account for every child at birth seeded with $1,000. Each year until age 18, the child would receive a deposit of up to $2,000, depending on family income. The proposal would be paid for, in part, by returning the estate tax rate to its 2009 level—estates worth more than $3.5 million would pay a 45 percent tax.

Anti-estate tax groups will also begin building the foundation for full repeal if Republicans make a full sweep in 2020, Wolff said.

Achieving those goals means lining up commitments now from lawmakers by urging them to co-sponsor repeal legislation and to sign pledges, Schoening said.

The leading proponents of estate tax repeal in Congress are likely to be Reps. Jason Smith (R-Mo.) and Sanford D. Bishop Jr. (D-Ga.) and Sen. John Thune (R-S.D.), he said.

The FBC is also hopeful it will be able to get the support of Sen. Kyrsten Sinema (D-Ariz.), who voted for repealing the estate tax when she was in the House, Schoening said.

Democrats’ Stances

Democrats running for president and other government positions in 2020 may make the estate tax a campaign issue as they try to tie it to broader issues of income inequality and tax fairness, said Matthew Green, a politics professor at the Catholic University of America.

“These were also major criticisms of the last tax reform bill, and several successful Democratic candidates ran against the bill in the midterm elections,” Green told Bloomberg Tax in an email. “So Democrats may have an incentive to highlight these issues in 2020.”

Besides Booker, two other possible Democratic contenders for president, Bernie Sanders (I-Vt.), and Elizabeth Warren (D-Mass.), have already proposed plans to raise the estate tax.

“We have a tax policy that doesn’t maximize opportunities for working Americans,” Booker told Bloomberg Tax Dec. 18. “We need to have a tax code that reflects our values, our priorities and incentivizes growth and more opportunity for everybody.”

Getting there will require more than just levying higher estate taxes on the very wealthy, Booker said. He pointed to the special tax treatment applied to profits earned by hedge fund and private equity managers, known as carried interest, as another problem in the tax code.

Setting the Terms of the Debate

Lobbyists from both camps said the focus over the next two years will be more on messaging than actual legislative action.

It’s possible the higher exemption is rolled back and used as a payfor for other changes but “I’m not going to hold my breath waiting for it,” Pearl said.

Such a change would require the support of Senate Republicans, who likely won’t be keen on revisiting parts of the 2017 tax law unless Democrats are proposing locking in the law’s temporary provisions, Schoening said.

Frank Clemente, executive director of Americans for Tax Fairness, said if Republicans agree to tax increases to offset other priorities, the revenue would probably come from new taxes, such as a gas tax, rather than changes to the tax law.

This could include fringe issues related to the estate and gift taxes. For example, it’s possible that lawmakers place new limits on wealth transfer vehicles, known as grantor retained annuity trusts, as a way to raise revenue, Schoening said. GRATs can be used to shield appreciating assets from estate and gift taxes.

Those types of technical changes “are not bumper sticker type issues” so they’re trickier to fight, he said.

Clemente said ATF plans to roll out a paper next year on potential revenue raisers for congressional and presidential candidates to consider. Changes to the estate tax, including some of the smaller-ticket items dealing with issues such as GRATs, will be part of that, he said.

“It will show how to raise trillions of dollars in new revenue from the wealthy and corporations,” Clemente said. “We’ve got to set the terms of the debate now for what could happen if the whole Congress and the presidency changes in 2020.”

To contact the reporter on this story: Allyson Versprille in Washington at

To contact the editors responsible for this story: Meg Shreve at; Colleen Murphy at