Senator Wiener’s Statement on Donald Trump’s Proposed Elimination of the Federal Estate Tax
Sacramento – Today, Senator Scott Wiener (D-San Francisco) released the following statement about the proposed repeal of the federal estate tax by President Donald Trump, and the need to replace this cut with a California Estate Tax:
“If Donald Trump wants to give a giant tax break to his own family and all of his rich friends by killing the federal estate tax, then California should step up and enact our own estate tax. Our state has many needs, and a massive tax cut for the wealthy is not one of them. Let's keep these funds working for our community by investing in healthcare, education, and public transportation.”
Senator Wiener’s Senate Bill 726 will create a California estate tax if Congressional Republicans and President Trump follow through on their threat to repeal the federal estate tax. The proposed California estate tax will be identical to the current federal estate tax - which generated $4.5 billion a year from California in 2015, the last reported year - meaning that California residents will not experience a tax increase but rather a replacement of the repealed federal estate tax with an identical California estate tax for use in California for key needs threatened by the Trump Administration such as healthcare and transportation.
The estate tax applies only to estates of $5.5 million and above. If Congress does not repeal the federal estate tax, Senator Wiener will withdraw this measure. In other words, this measure is intended exclusively as a means to counter-balance destructive federal tax policies - policies that undermine progressive taxation - by recouping federal tax cuts locally.
Under current California law, as adopted by the voters in 1982, a state-level estate tax is prohibited. Senator Wiener's bill asks California voters to repeal that ban and, in its place, to enact an estate tax mirroring the current federal estate tax. Thus, if Congress repeals the tax, California will simply collect the revenue itself, around $4.5 billion annually, and use the funds for critical needs threatened by the current Administration.
In 2015, the $4.5 billion high-net-worth residents of California paid in federal estate taxes constituted 26% of the national amount collected that year. SB 726 will keep those funds in California instead of flowing to the federal government. Considering that California is generally a donor state to the federal government, this would mean significantly more money would remain in California for critical investments.
The current federal estate tax is set at 40% for all assets passed on after death above $5.49 million. This means that if one were to pass $10 million on to his or her child, $5.49 million would not be taxed but the remaining $4.51 million would be taxed at 40%. There are two bills pending in the Republican-controlled House Ways and Means Committee and the Senate Finance Committee to repeal the Estate Tax.