Plan On Having The Death Tax Live On

Senators Kevin Cramer and John Thune, Republicans who represent Dakota, North and South respectively, have introduced the Death Tax Repeal Act of 2023. This is not a new thing. I think the origination of the term “death tax” is a little murky but much credit for its adaptation as a GOP talking point goes to communication consultant Frank Luntz. Representative Wes Watkins of Oklahoma celebrated his conversion to Republican by sponsoring a Death Tax Repeal Act in 1997 and there are numerous subsequent submittals. The Death Tax Repeal Act would repeal the estate and generation skipping tax, but leave the gift tax in place.

Since the Tax Cuts and Jobs Act of 2017 (TCJA), the death tax or, as those liberals and the Internal Revenue Code refer to it, estate tax has been less of a concern as the exemption created by the unified credit was doubled. As indexed for inflation the exemption will shelter $12.92 million in 2023. When you throw in the unlimited marital deduction with some fairly easy planning a couple can pass $25.84 million to the next generation without estate tax. Or if they are of a dynastic bent they can put the $25,84 million into a generation skipping tax exempt trust and insulate it and its growth from transfer taxes and state income tax for a thousand years. If you get fancy with family limited partnerships and other techniques the $25.84 million exemption can shelter even more in assets thanks to valuation discounts.