Top Republican leaders in Congress appear poised to follow President-elect Trump’s lead and work toward repealing the Estate Tax, also called the “Death Tax”, in early 2017. It could be a stand-alone bill, or a part of a wider tax overhaul planned when a new Congress is sworn in next January.
South Dakota Senator John Thune appears to be leading the charge to repeal the Estate Tax. Thune believes he can create a strong alliance in Congress to pass a repeal, and since he is a senior member of the Finance Committee, he hopes to move the repeal along quickly.
The Estate Tax repeal is also a part of President-elect Trump’s “Better Way” agenda. He has support of Republicans in the House, which will maintain a majority in the upcoming 115th Congress. Republicans are estimating the repeal will eliminate $200 billion in revenue over 10 years, which remains a tiny percentage of tax revenue collected on a federal level.
The Estate Tax says individuals can inherit up to $5.45 million in assets without being taxed, but everything over that amount is taxed at a 40% rate. When family-owned businesses, like electrical distributors, have warehouses filled with inventory, not to mention property and vehicles, it is up to surviving family members to pay the estate tax on everything the business owns. In many cases, the Estate Tax forces families to liquidate assets to pay the tax. The Estate Tax was passed in 2013 as a way to avoid what was called the “fiscal cliff” in December of 2013 as a way to avoid a government shutdown.
Palmer Schoening is the Executive Director of the Family Business Coalition and someone who works very closely with NAED and other associations. He recently told tED magazine, “The death tax hurts family business owners and farmers seeking to pass to the next generation.”
Senator John Thune expressed his concern about tax law in a speech on Capitol Hill late last month. His comments begin at 4:09 of this video:
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