Estate Tax Repeal Bills Introduced

February 1, 2017

On Jan. 24, Senator John Thune (R-S.D.) reintroduced with 27 original cosponsors, the Death Tax Repeal Act of 2017 (S. 205) to abolish the federal estate tax. The bipartisan legislation is identical to the bill (H.R. 631) introduced in the House by Reps. Kristi Noem (R-S.D.) and Sanford Bishop (D-Ga.) which has six original cosponsors. A previous version of Thune’s bill was adopted as part of the non-binding fiscal year 2016 budget resolution.

Many studies have quantified the potential job growth that would result from full estate tax repeal. Last year the Tax Foundation found that the U.S. could create over 150,000 jobs by repealing the estate tax. A 2012 study by the House Joint Economic Committee found that the estate tax has destroyed over $1.1 trillion of capital in the U.S. economy–loss of small business capital means fewer jobs and lower wages.

The American Taxpayer Relief Act of 2012 made the following permanent: (1) the reunification of the estate and gift tax regimes, (2) the $5 million estate, gift and generation-skipping transfer (GST) tax exemptions, as increased for inflation and (3) portability of the federal estate tax exemption between spouses at death.

Therefore, for 2017, the estate and gift tax exemption is $5.49 million per individual, up from $5.45 million in 2016, with a 40 percent top federal estate tax rate. A married couple will be able to shield just shy of $11 million ($10.98 million) from federal estate and gift taxes. The annual gift exclusion remains at $14,000 for 2017 and $28,000 for gifts made by a married couple who agree to “split” their gifts.

As part of both the Family Business Coalition and the Family Business Estate Tax Coalition, NSBA signed onto several letters of support for both S. 205 and H.R. 631. In order for small businesses to get back to growing their business, hiring employees, and focusing on expansion, rather than working to ensure their families are not left bankrupt by estate taxes, NSBA supports full and permanent repeal of the estate tax.