Here We Go Again — Taxing Us to Death and Beyond
As President Obama ramps down his time in the White House and looks to his life beyond the political spotlight, some were hoping that he would go away quietly and not try to slip in new regulations as he left. Unfortunately, it appears that President Obama has other thoughts. He has ordered the Treasury Department to release a new proposed rule that would push back on Congress’ bipartisan resolution on the “death tax” and create a political wedge between Donald Trump and Hillary Clinton.
You may remember that the repeal of the “death tax” has been and will continue to be a top priority for the Mason Contractors Association of America (MCAA). We were very pleased with the recent compromise legislation that lowered the top tax rate and indexed the exemption amount. Current top rates in 2016 stand at 40 percent, while the exemption rate stands at $5,450,000.
The death tax has been the cause of many headaches to business owners and family members throughout the decades it has been around — and that was before the tax rates and exemption levels changed nine times between 2002 and 2012. Estimates have shown that, in 2006 alone, family businesses spent more than $28 billion just to comply with the law, and only 10 percent of small business owners have a good understanding of the death tax and their compliance requirements. But what is most egregious is the fact that this tax is levied simply by the death of a business owner and on assets that have already been taxed.
So as President Obama is packing up boxes in the White House, his Treasury Secretary, Jacob Lew, is busy trying to circumvent Congress and raise the “death tax.” Lew has already released a rule that, according to the White House, was released for the following reason:
Why the Treasury Department Is Taking Action Now on the Estate Tax
Right now, the wealthy few impacted by the estate tax, with the help of their lawyers and accountants, can use sophisticated strategies to artificially reduce the value of their assets for tax purposes. One way they do this is by placing certain restrictions on their assets in order to justify “discounting” their value when transferred — resulting in a lower tax bill — without meaningfully changing the value of the entire family’s interests in the property.
“Treasury’s action updates and strengthens the rules that apply to these kinds of estate planning strategies, making it more difficult for very wealthy families to claim large discounts on the value of their assets for tax purposes.”
— The White House Blog*
We are not standing by and watching this lying down. We know this tax and this rule do not just hit the “wealthiest few,” as the Administration contends. This tax and rule will hit every family-owned business owner in our country. We have written many times in this space over the years about the cost and time it takes family-owned and small business owners to comply with the “death tax,” even if they do necessarily not have to pay it. And we will remind the White House and members of Congress about the true impact this tax and this new proposed rule has on you, our members. Take the time to visit the White House blog and see how this issue is being framed by the White House. Then call your members of Congress to make your voice heard and ensure you can pass your business along to your sons and daughters.