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NAED Pushes Congress On Estate Tax Repeal

NAED has joined 37 other industry groups to support Congressman Kevin Brady and Congressman Dave Camp in their efforts to call for a vote to on the “Death Tax Repeal Act”  HR 2429.  The Family Business Coalition released a letter to key members of Congress on Thursday morning, July 10, to express support for the Act.

NAED has been working with our coalition partners for more than two years to bring a House vote to fruition and our members have been active in helping the bill gain support.  This was also a key topic of discussion at last year’s NAED Congressional Fly-In, and will probably be again at this September’s Fly-In.

The estate tax is especially harmful to family businesses because they tend to be asset rich but cash poor, meaning they lack the cash on hand to pay a 40 percent estate tax. Oftentimes, they must fire workers, sell equipment, or close the business entirely to pay Uncle Sam. Nearly 70 percent of family businesses do not survive to the second generation and a full 90 percent close before the third generation, due in part to the estate tax.  Repealing the estate tax will help our family businesses grow and pass to future generations.

The estate tax made recent news when Congressman Brady’s Death Tax Repeal Act surpassed 218 bipartisan cosponsors, reaching a majority of the House of Representatives. Senator John Thune carries the mirror bill in the US Senate with 37 cosponsors. The estate tax was also recently featured in articles detailing Bill and Hillary Clinton’s planning to legally avoid the estate tax, while voting consistently to impose it on the rest of the country.

The Family Business Coalition sent the letter to Reps. Brady and Camp, along with House Leadership, including House Speaker John Boehner.  NAED was one of 38 organizations and associations to sign the letter.

Chairman Camp and Congressman Brady:

The undersigned organizations are encouraged by your recent statements in Forbes regarding the need for the House of Representative to vote on the Death Tax Repeal Act, H.R. 2429 this year. We believe that full repeal of the death tax is the only permanent solution for America’s family businesses and farms and applaud your efforts to bring this important issue to the floor for the first time in over nine years. Our member family business owners across the country deserve to see where their elected representatives stand on death tax repeal. As it stands now, the majority of House members (236) have never had the opportunity to vote on full repeal of the death tax.

Congressman Brady’s Death Tax Repeal Act recently amassed over 220 bipartisan cosponsors, giving the bill enough support to pass the House with cosponsors alone. Your call for the first vote since 2005 on death tax repeal legislation is encouraging to our members who want to see consistent action in Congress on this issue.

We appreciate your work to lead the country towards a common sense tax code that does not impose a destructive double or triple tax at death and look forward to working with you to achieve a floor vote before the November elections. We support full and permanent repeal of the federal estate tax for the following reasons:

Repealing the death tax would spur job creation. According to a study by Douglas Holtz- Eakin, Ph.D, former Director of the Congressional Budget Office, repealing the death tax would add nearly one million additional small business jobs. Job creation at that level would shave almost a percentage point off our high unemployment rate. A 2012 Joint Economic Committee found that the death tax has prevented $1.3 trillion in capital formation, which could have been used to increase employment and expand GDP.

The death tax contributes a very small portion of federal revenues. The death tax currently accounts for only half of one percent of federal revenue. There is a good argument that not collecting the death tax would lead to higher economic growth and thereby increase federal revenue from other taxes. Former undersecretary of the Treasury,

Steve Entin, found that repealing the death tax would increase tax revenues by nearly $89 billion over 10 years using a more realistic “dynamic” economic analysis. The death tax imposes burdensome compliance costs and forces family businesses to divert productive capital into large life insurance policies and expensive estate planning.

The death tax falls particularly hard on minorities. African-Americans have increasingly in the last generation started accumulating generational capital, but the death tax threatens to confiscate it. Death tax liabilities bankrupted the Chicago Daily Defender – the oldest black-owned daily newspaper in the United States and will reduce net African- American wealth by 13 percent, according to a study conducted by Boston College professors John Haven and Paul Schervish. According to a 2004 Impacto Group poll, 50 percent of Hispanic business owners know someone who sold their business to pay the death tax and a quarter expect to sell their business because of the death tax.

A super-majority of likely voters support eliminating the death tax. Poll after poll has indicated that a super-majority of likely voters support repealing the death tax. Typically, two thirds of likely voters support full and permanent repeal of the death tax. People instinctively feel that the death tax is not fair.

The death tax is unfair. It makes no sense to require grieving families to pay a confiscatory tax on their loved one’s nest egg. Often, this tax is paid by selling family assets like farms and businesses. Other times, employees of the family business must be laid off and payrolls slashed. No one should be punished for fulfilling the American dream.

The negative effects of the death tax make permanent repeal the only solution for family businesses and farms. Passing H.R. 2429, Congressman Brady’s Death Tax Repeal Act, will help America’s family businesses create jobs, expand operations, and grow the economy. We thank you for your continued leadership on this important issue.

 

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