What is the estate tax and who does it benefit?
Rep. Vern Buchanan has ranked among the wealthiest members of Congress since coming to Washington in 2007, and now an effort to overhaul the nation’s tax code could benefit the Sarasota Republican’s family once he dies.
Buchanan voted in favor of a bill to overhaul the nation’s tax code last week during a House tax writing committee markup, and the bill includes a phased-out repeal of a tax on estates valued at more than $5.49 million for people who died in 2016.
The estate tax, dubbed the “death tax” by its opponents, affects about two-tenths of 1 percent of Americans with estates valued above that sum. Buchanan is one of them, with an estimated net worth of between $100 and $264 million, according to his most recent financial disclosure forms. Just 5,400 estates nationwide would owe any estate tax next year, including 620 estates in Florida, according to the left-leaning Center for Budget and Policy Priorities.
An analysis by McClatchy calculated the net worth of lawmakers on the House and Senate tax-writing committees. The most conservative calculations showed at least 12 percent of those committees' members could benefit personally from reducing or eliminating the estate tax, including Buchanan. But that number could be as high as about 25 percent, depending on the actual value of their assets and liabilities, which they give not as precise figures but within a range.
To determine whether members of the tax-writing committees might benefit, McClatchy totaled the lowest and highest possible values for each member’s assets and subtracted the highest possible value of their debts. Members of Congress aren’t required to include their personal residences as assets on their disclosure forms unless they derive any income, such as rent, from them, so McClatchy's calculation is likely a conservative estimate of how many of these lawmakers might be able to leave more money to their heirs if Congress enacts changes to the estate tax.
Buchanan’s spokesperson said that repealing the estate tax will help economic growth.
“This isn’t about Vern, it’s about the thousands of small businesses and family farms that are unfairly penalized by the death tax,” said Buchanan spokesperson Riley Ploch. “Vern supports repealing the tax to create jobs and promote economic growth, which is why more than 700 economists, including 4 Nobel prize winners, have publicly urged repeal of the tax.”
Buchanan’s office also noted that Floridians pay “an average of $8,000 per year in federal income, payroll and estate taxes, according to the Associated Press.”
“Most Americans feel that people who have worked their entire lives to build a successful company and create jobs should not be slapped with a 40 percent tax when they die,” Ploch said.
Buchanan’s vast portfolio of assets includes four car dealerships in Florida and North Carolina. He has been sued by former employees of the dealerships and the Federal Election Commission once investigated Buchanan over allegations that car dealership employees were pressured to donate to his political campaigns and later reimbursed.
None of the lawsuits made it to trial and the FEC investigation into Buchanan was closed in June 2016 due to insufficient evidence.
House Republicans like Buchanan want to phase out the estate tax entirely, which would cost the U.S. Treasury $279 billion over the next 10 years. The Senate has proposed doubling the estate tax threshold to $10.98 million for individuals and $21.96 million for couples. Doubling the threshold means Buchanan would still have to pay taxes on his estate, since his net worth far surpasses $10.98 million.
The estate tax is just one element -- albeit a very controversial one -- of a massive tax overhaul effort by Republicans. Few lawmakers are likely to base their vote on the fate of that tax alone, regardless of whether it might benefit them or their heirs.
The House tax-writing Ways and Means committee passed its version of the bill last week on a party-line vote. That legislation is expected to get a vote in the full House on Thursday.
The Senate's Finance Committee is expected to vote on its version of the bill on Thursday.
If the House and Senate pass differing tax bills, which is expected, the two chambers will come together to hash out an agreement before a final vote. President Donald Trump is in favor of a tax code overhaul, meaning he will likely sign any bill that passes the GOP-controlled Congress.
Estates worth more than $5.49 million are currently taxed at a 40 percent rate; the tax isn’t levied on funds donated to certain charities or left directly to surviving spouses.
Buchanan recently drew a Democratic challenger for his seat in 2018 who once came within 750 votes of winning a state House seat and Buchanan recently announced that he wants Trump to reconsider his decision to withdraw from the Paris Climate Accord.
Buchanan's district voted for Trump over Hillary Clinton by 11 percentage points in 2016 though the Democratic Congressional Campaign Committee, which seeks to elect Democrats to the House, has put the seat on the organization's target list for the 2018 elections. The DCCC is also targeting all three Miami-based districts that are held by Republicans plus two more in Florida.
Buchanan has over $2 million on hand to defend his seat, according to Federal Election Commission records.
The other Florida Republican on the House tax writing committee, Miami Rep. Carlos Curbelo, would not be subject to the estate tax based on current estimates of his net worth.
McClatchy Washington bureau reporters Ben Wieder and Lindsay Wise and interns Joseph Cooke and James Whitlow contributed to this report.