Majority of U.S. House of Representatives Supports Permanent Repeal of the Estate Tax
On June 18, 2014, H.R. 2429, the Death Tax Repeal Act, gained its 221 cosponsor in the U.S. House of Representatives, giving the legislation a majority of House members who support the full repeal of the estate tax. The bill, introduced by Rep. Kevin Brady (R-TX), Chairman of the Joint Economic Committee and senior member of the House Ways and Means Committee, will hopefully reach the House floor for a vote in the near future. Companion legislation, S. 1183, has also been introduced in the U.S. Senate by Sen. John Thune (R-SD) and currently stands with 37 cosponsors.
As you know, the MCAA has long argued for the full repeal of the federal estate tax, and we are pleased that a majority of the Members of the U.S. House of Representatives agree with our position. While we played an active role in 2013 to permanently exempt the first $10 million in assets for families (and index that exemption for inflation), many Members of Congress and President Obama continue to push for higher tax rates on estates.Under current law, the estate exemption stands at $5,340,000 per individual in 2014 with a maximum tax rate of 40 percent. However, you and I both know that the cost of the estate tax cannot be simply measured by the number of individuals who pay the estate tax upon the death of a family member, but in the reality that most business owners must spend endless amounts of time and money planning how to ensure that they will be able to pass along their businesses as a result of the estate tax.
As so many have discussed in this debate, the death tax was essentially enacted to hinder the accumulation of wealth and land by a few families. However, as time has passed, and as the tax hits more small businesses, the effect has become a business destroyer as families have had to sell off business equipment, buildings and assets just to pay the death tax.If there is a death at a company, especially unexpected, most contractors have little if any liquid assets or cash.
If a contractor has work, he will not have a lot of cash on hand as many of our contractors have to work from credit lines to float projects until completion, especially in today’s economy. The result, unfortunately, is the shuttering of the doors of businesses just because of the death of an owner.
The MCAA, the Family Business Estate Tax Coalition (of which the MCAA is a member), and countless other organizations will continue to voice our support for the full repeal of the estate tax and, while we are excited with the recent news, we must keep this momentum going.
I would implore you to contact those members of the House and Senate who are not yet cosponsors of The Death Tax Repeal Act and ask them to join their colleagues in supporting the full repeal of the federal estate tax once and for all. The majority is on our side, and it is time for this tax to be repealed.
Stephen Borg is VP of The Keelen Group, www.keelengroup.com.