If Trump were elected and got his tax plan through, then running for President would be the most profitable business deal he ever made.
His tax plan would eliminate the federal estate tax entirely. Currently, federal tax laws allow the first $5.45 million of an estate’s value to be free of taxation and the balance is taxed at a rate of 40%.
Increasing the exemption amount to $5.45 million in 2010 was a recent windfall to the wealthy. As recently as 2009 the exemption amount was $1 million. In 2001 it was $645,000.
The dramatic exemption increase was in part due to Democrats going along with the “sad” story of relatively small family businesses which had to be sold to pay estate taxes. That premise was debunked in this article from Money magazine. Who Pays Estate Taxes
Beyond the sad small family business argument, Trump vigorously asserts the “moral” argument that the estate tax effectively taxes money twice: once when it was earned and again at the earner’s death. The absurd idea is that there is wide spread injustice being done to taxpayers who save between $5.45 million dollars to billions of their already-taxed income.
The public now knows his claim of “double taxation” is a sham. Large estates get large mostly through appreciation of assets or the increase in a business’s value. Moreover, taxes are not paid on the profits of a business if it can use losses like Trump has. Taxes are paid on the appreciation of assets (like real estate) only when the asset is sold. Bill Gates has made $100 billion on his Microsoft stock and has likely paid little or nothing of federal taxes for the gain.
Based on Trump’s exaggerated claim this his own net worth is $10 billion, the tax benefit of his proposed tax plan would be about $4 billion. More realistically, his estate is worth about 4 billion and the gain would be $1.6 billion. Of course those amounts are based on his estate being settled now. If it were settled 21 years from now, the profit would likely be upwards of two or three times that.
I hope an interviewer or debate moderator points this out to him and asks that Trump support his “double taxation” argument. And maybe someone will ask Giuliani and Christie, if Trumps “business genius” extends to his running for President.
The Money magazine article shows how the estate tax repeal is really just a windfall to top 1%. It will increase the deficit by hundreds of billions of dollars.