Statements on Introduced Bills and Joint Resolutions
Floor Speech
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Mr. THUNE. Mr. President, later today, I will introduce a bill to repeal the death tax.
As I mentioned, as a resident of a rural State filled with family farms and ranches, I have made death tax repeal a priority for a long time, and I was proud to help secure a doubling of the death tax exemption in the 2017 Tax Cuts and Jobs Act. This doubled exemption has provided certainty to a lot of farms and ranches and small businesses over the past 7 years, but the expanded exemption is expiring at the end of this year. It is my hope that we will not merely extend this exemption but that we will get rid of this fundamentally flawed tax once and for all.
The death tax is fundamentally flawed both in theory and in practice. There should be a limit to how many times the government can tax you. The money you leave at your death has already been taxed by the government at least once, which makes the death tax double taxation, and the government isn't even profiting all that much from this double taxation. That is right. The death tax accounts for a teeny, tiny fraction of government revenue. In fact, there is reason to believe that the government would collect more in taxes if it got rid of the death tax entirely due to the economic growth and job creation that would stem from its elimination.
So how is there any support left for this burdensome tax? That is a good question. For some, of course, heavy taxation is axiomatic. ``Do well,'' their thinking runs, ``and the government should come after you.'' Some think that you shouldn't be able to pass the results of hard work down to your children upon your death.
Well, death tax proponents tend to talk as if the death tax only affects the extremely wealthy, but nothing, of course, could be further from the truth. The death tax can sweep up those who have very little in the bank--notably, family farms and ranches and family businesses. How? Well, farming and ranching is often a cash-poor business. A farmer might have substantial looking assets on paper, but the vast majority of that is land and farming equipment. Only a small fraction of it is money in the bank.
On top of that, farmland can often be valued at a level that is inconsistent with its agricultural productivity value. A farmer might have land with a substantial value on paper, but the crop yield on that land could be worth far, far less.
So what happens when a farmer or a rancher dies and his estate is subject to the tax? There is a very good chance that his liquid assets--in other words, the cash he has available in the bank--won't come close to covering the tax bill from the Federal Government, and the only alternative for his heirs may be to start selling off land or farm equipment to pay the tax. In some cases, they will be able to keep the farm, just a smaller version of it; in others, they may have to sell off the family farm entirely.
The case is similar with family-owned businesses. The owner might appear to have substantial looking assets on paper, but only a small fraction of that may be money in the bank. The vast majority may be tied up in the business. Once again, when the Federal Government comes around, demanding a huge portion of this individual's taxable estate, there may not be anywhere close to enough money in the bank to pay the tax. To pay the Federal Government, the owner's descendants will have to sell off part or all of the family business.
Now, family farms and ranches are the lifeblood of the rural communities in South Dakota. They are a source of jobs. They provide support for local businesses. They help build up local schools and local infrastructure. Losing a local farm can hit rural communities very, very hard, especially when that farm or ranch is bought up by an out-of-State business with few ties to the community and limited interest in building it up.
It is not just those who actually get hit by the estate tax who suffer. A lot of family farms and ranches and family businesses spend a lot of time and money on estate planning to avoid being hit by this tax. That is time and money that could have gone into building their business, investing in new equipment, hiring new workers, and the list goes on.
Some set aside capital to prepare for the death tax--capital that, again, could go into building up a farm or ranch or hiring new workers for the family business.
As one of my Democrat colleagues, the senior Senator from Washington, said a while back:
The estate tax is bad for businesses. It is bad for workers and new job creation. And it is bad for our communities who are watching their local, family-owned businesses get swallowed up by large corporations.
As I said, we protected a lot more family farms and family businesses by doubling the death tax exemption in the Tax Cuts and Jobs Act back in 2017, but we didn't protect them all. And those we did protect will lose those protections at the end of this year. It is time to end this punishing and burdensome tax once and for all.
I want to thank my Republican colleagues who have joined me in sponsoring this legislation. I hope that 2025 will be the year that we permanently bid farewell to the death tax.
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Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE.
This Act may be cited as the ``Death Tax Repeal Act of 2025''. SEC. 2. REPEAL OF ESTATE AND GENERATION-SKIPPING TRANSFER TAXES.
(a) Estate Tax Repeal.--Subchapter C of chapter 11 of subtitle B of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: ``SEC. 2210. TERMINATION.
``(a) In General.--Except as provided in subsection (b), this chapter shall not apply to the estates of decedents dying on or after the date of the enactment of the Death Tax Repeal Act of 2025.
``(b) Certain Distributions From Qualified Domestic Trusts.--In applying section 2056A with respect to the surviving spouse of a decedent dying before the date of the enactment of the Death Tax Repeal Act of 2025--
``(1) section 2056A(b)(1)(A) shall not apply to distributions made after the 10-year period beginning on such date, and
``(2) section 2056A(b)(1)(B) shall not apply on or after such date.''.
(b) Generation-Skipping Transfer Tax Repeal.--Subchapter G of chapter 13 of subtitle B of such Code is amended by adding at the end the following new section: ``SEC. 2664. TERMINATION.
``This chapter shall not apply to generation-skipping transfers on or after the date of the enactment of the Death Tax Repeal Act of 2025.''.
(c) Conforming Amendments.--
(1) The table of sections for subchapter C of chapter 11 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item: ``Sec. 2210. Termination.''.
(2) The table of sections for subchapter G of chapter 13 of such Code is amended by adding at the end the following new item: ``Sec. 2664. Termination.''.
(d) Effective Date.--The amendments made by this section shall apply to the estates of decedents dying, and generation-skipping transfers, after the date of the enactment of this Act. SEC. 3. MODIFICATIONS OF GIFT TAX.
(a) Computation of Gift Tax.--Subsection (a) of section 2502 of the Internal Revenue Code of 1986 is amended to read as follows:
``(a) Computation of Tax.--
``(1) In general.--The tax imposed by section 2501 for each calendar year shall be an amount equal to the excess of--
``(A) a tentative tax, computed under paragraph (2), on the aggregate sum of the taxable gifts for such calendar year and for each of the preceding calendar periods, over
``(B) a tentative tax, computed under paragraph (2), on the aggregate sum of the taxable gifts for each of the preceding calendar periods.
``(2) Rate schedule.-- ``If the amount with respect to which The tentative the tentative tax to be computed is:. tax is: Not over $10,000....................... 18% of such amount. Over $10,000 but not over $20,000...... $1,800, plus 20% of the excess over $10,000. Over $20,000 but not over $40,000...... $3,800, plus 22% of the excess over $20,000. Over $40,000 but not over $60,000...... $8,200, plus 24% of the excess over $40,000. Over $60,000 but not over $80,000...... $13,000, plus 26% of the excess over $60,000. Over $80,000 but not over $100,000..... $18,200, plus 28% of the excess over $80,000. Over $100,000 but not over $150,000.... $23,800, plus 30% of the excess over $100,000. Over $150,000 but not over $250,000.... $38,800, plus 32% of the excess over $150,000. Over $250,000 but not over $500,000.... $70,800, plus 34% of the excess over $250,000. Over $500,000.......................... $155,800, plus 35% of the excess over $500,000.''.
(b) Treatment of Certain Transfers in Trust.--Section 2511 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
``(c) Treatment of Certain Transfers in Trust.-- Notwithstanding any other provision of this section and except as provided in regulations, a transfer in trust shall be treated as a taxable gift under section 2503, unless the trust is treated as wholly owned by the donor or the donor's spouse under subpart E of part I of subchapter J of chapter 1.''.
(c) Lifetime Gift Exemption.--
(1) In general.--Paragraph (1) of section 2505(a) of the Internal Revenue Code of 1986 is amended to read as follows:
``(1) the amount of the tentative tax which would be determined under the rate schedule set forth in section 2502(a)(2) if the amount with respect to which such tentative tax is to be computed were $10,000,000, reduced by''.
(2) Inflation adjustment.--Section 2505 of such Code is amended by adding at the end the following new subsection:
``(d) Inflation Adjustment.--
``(1) In general.--In the case of any calendar year after 2011, the dollar amount in subsection (a)(1) shall be increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting `calendar year 2010' for `calendar year 2016' in subparagraph (A)(ii) thereof.
``(2) Rounding.--If any amount as adjusted under paragraph (1) is not a multiple of $10,000, such amount shall be rounded to the nearest multiple of $10,000.''.
(d) Conforming Amendments.--
(1) Section 2505(a) of such Code is amended by striking the last sentence.
(2) The heading for section 2505 of such Code is amended by striking ``unified''.
(3) The item in the table of sections for subchapter A of chapter 12 of such Code relating to section 2505 is amended to read as follows: ``Sec. 2505. Credit against gift tax.''.
(e) Effective Date.--The amendments made by this section shall apply to gifts made on or after the date of the enactment of this Act.
(f) Transition Rule.--
(1) In general.--For purposes of applying sections 1015(d), 2502, and 2505 of the Internal Revenue Code of 1986, the calendar year in which this Act is enacted shall be treated as 2 separate calendar years one of which ends on the day before the date of the enactment of this Act and the other of which begins on such date of enactment.
(2) Application of section 2504(b).--For purposes of applying section 2504(b) of the Internal Revenue Code of 1986, the calendar year in which this Act is enacted shall be treated as one preceding calendar period. ______
By Mr. PADILLA (for himself, Mr. Blumenthal, Mr. Booker, Mr. Coons, Ms. Duckworth, Mr. Durbin, Mrs. Gillibrand, Ms. Hirono, Mr. Kaine, Ms. Klobuchar, Mr. Murphy, Mrs. Murray, Mr. Reed, Mr. Sanders, Mr. Schatz, Mr. Schiff, Ms. Warren, Mr. Whitehouse, and Mr. Wyden):
S. 597. A bill to amend title 18, United States Code, to prohibit the purchase of certain firearms by individuals under 21 years of age, and for other purposes; to the Committee on the Judiciary.
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