House Committee to Vote on Estate Tax RepealMarch 24, 2015
On March 25, 2015 the House Committee on Ways and Means will markup H.R. 1105, the Death Tax Repeal Act of 2015, a bill to permanently repeal the estate tax. Introduced by Reps. Kevin Brady (R-Texas) and Sanford Bishop (D-Ga.), the legislation will amend the Tax Code to completely and permanently repeal the Federal estate, gift, and generation-skipping transfer taxes. While similar pieces of legislation have been introduced in previous years, this year’s bill will likely proceed to the House floor for a vote – the first in a decade.
Federal estate and gift taxes harm family-owned businesses on an ongoing basis because the owner of the business must take various—and often very costly—estate planning measures such as purchasing insurance and/or the creation of trust funds to ensure the future viability of the business. If families do not take these steps, they may have to liquidate the business to pay the estate taxes. The ongoing uncertainty of the estate tax has resulted in more confusion, complexity and estate planning costs for small businesses.
Until 2012, estates paid a 35 percent estate tax with a $5 million exemption. The tax was scheduled to revert in 2013 to 2001 levels, with only a $1 million exemption and a 55 percent tax rate. However, the current top rate for the estate tax, 40 percent, was put into the place by the fiscal cliff measure—American Taxpayer Relief Act—signed into law more than two years ago. Individuals now have an indexed $5.43 million exemption for the tax, with married couples getting $10.86 million.
On March 18, the House Ways and Means Subcommittee on Select Revenue Measures held a hearing to examine the burden the estate tax places on family businesses and farms. This was the first hearing on the subject of repeal since the 1990s—a move signifying to Congressional leadership and the administration the importance of estate tax repeal.
Today, it is also expected that Senator John Thune (R-S.D.) will reintroduce his companion legislation in the Senate to H.R. 1105. This timeline is in conjunction with a press conference being held on Thursday with Sen. Thune, and Reps. Brady and Bishop in support of repealing the estate tax.
There is also a strong possibility that there could be a vote on an estate tax repeal amendment during consideration of the budget in the Senate either today or tomorrow. The amendment will likely be similar, although not identical to the amendment that Sen. Thune offered during the “vote-a-rama” last Congress. Last Congress, there were two estate tax amendments offered during consideration of the budget. The first, offered by Senator Thune, received the support of every Senate Republican, except for Senator Susan Collins (R-Maine), along with Senators Joe Manchin (D-W.Va.) and Max Baucus (D-Mont.) from the Democratic caucus. A separate amendment offered by Senator Mark Warner (D-Va.) to repeal or reduce the estate tax, but only if done in a fiscally responsible way was approved overwhelmingly by a vote of 80-19, with all Republicans and 35 Democrats voting in favor.
All this attention is intended to lead up to an April House floor vote on H.R. 1105. This would be the first House vote on stand-alone repeal legislation since 2005 and a major milestone in returning the issue of estate tax repeal back to the forefront of the tax policy debate.