Zombies And Tombstones Foretell Estate Tax Repeal In 2017

Ashlea Ebeling, Forbes Staff
June 6, 2013

The big January tax law made the federal estate tax permanent, but the man who dubbed it the “death tax” is back battling to get rid of it. “We can repeal this tax in 2017,” booms 77-year-old Jim Martin, one of the early eccentric advocates of estate tax repeal, who now heads up the 60 Plus Association, a conservative seniors organization.

Of course, that’s assuming there’s a Republican president elected in 2016. But nothing seems to deter Martin, who in a series of ads is trying to reestablish himself as the ringleader of the repeal cause.

In one ad, Martin calls burying the death tax a “shovel ready” job under the image of a tombstone. He pits death tax foes including Mitch McConnell, John Boehner, Pat Boone, and Grover Norquist on the side of Ronald Reagan against death tax proponents including President Barack Obama, Bill Gates Sr., Warren Buffet and George Soros on the side of Karl Marx who famously called for the “abolition of all rights of inheritance” in the Communist Manifesto.

In another creepier ad featuring zombies in the background, Martin introduces a death tax timeline, showing how the tax was enacted three times to pay for wars and quickly repealed (1797 to 1802; 1862 to 1870; and 1898 to 1902) and again in 1916 to help pay for World War 1. “That conflict ended almost 100 years ago. Now is the time to drive a stake through the heart of the DEATH TAX for the fourth and final time!” the ad proclaims. (For a 90-year history of the estate tax, courtesy of IRS researchers, check out: The Estate Tax: Ninety Years And Counting).

From his office in Arlington, Va., Martin says that he’s working on a third ad, comparing the death tax timeline to a timeline on the repeal of the federal telephone excise tax which has a similar history of having been enacted to fund the Spanish-American War and later repealed and reenacted and finally repealed  (for all but local-only service) in 2006 under the Bush presidency (President Bill Clinton vetoed an earlier repeal bill).

Martin has been running the ads in The Washington Times and The Washington Examiner, and he ran the ads in April in the Dallas Morning News to coincide with the George W. Bush Presidential Library dedication in University Park, Texas. (Martin boasts that Bush said he saw his ad.)

There was one magic year — 2010 — with no federal estate tax, thanks to the Bush tax cuts. The estate tax was set to return on Jan. 1, 2011 with a $1 million exemption and a 55% top rate, but in December 2010 Congress temporarily upped the exemption to $5 million. Then this past January Congress made that exemption permanent and indexed for inflation and set the rate at 40%. The exemption is $5.25 million for 2013. Surviving spouses can carry over each other’s unused exemptions, so that means a couple can shield a combined $10.5 million.

After the January tax law, “A lot of people thought the fight was over,” Martin says, “but I decided, ‘Let’s get back in the battle.” But isn’t the estate tax permanent now? “There’s no permanency in this town,” he says, noting that President Barack Obama’s latest budget calls for a $3.5 million exemption and a 45% rate.

The exemption has gone up from $600,000 (with a 55% top rate) when Martin first started rallying against the tax in the 1990s to $5.25 million today (with a 40% top rate). “That’s progress,” he says but not a reason to give up. He signs his emails: “Kill the Death Tax. Don’t Wound It!”

Sen. John Thune (Rep.-S.D.) will be reintroducing a repeal bill in the coming weeks, according to his staff; Martin shoots hoops with him. And Rep. Kevin Brady’s (Rep.-Texas) companion bill should follow, possibly as part of a bigger tax reform package. Martin says his 60 Plus Association will push to get co-sponsors, holding certain Congressional members accountable, with an eye towards key Senate races in 2014.

Another roundabout way opponents are fighting the estate tax is by supporting what’s known as dynamic scoring. That takes into account macroeconomic effects of tax changes. Looking at it that way, instead of costing $600 billion over 10 years, estate tax repeal would cost $200 billion over 10 years.

Meanwhile estate tax proponents — although they might not be as visible — aren’t giving up either. The January tax law made the federal estate tax stronger by raising the tax rate from 35% in 2012 to 40% as of Jan. 1, 2013, notes Mike Lapham, director of the Responsible Wealth project with United for a Fair Economy, adding that his group is looking at ways to strengthen the estate tax further. The group’s responsible estate tax proposal signed by Buffett, Gates Sr., and Soros, calls for a $4 million per couple exemption and a starting tax rate of 45%. “We think there will be times when Congress is looking for new revenue sources, and this is a fairly easy one; I should say painless,” says Lapham.

And so the battle resumes.

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