NSBA Urges the Senate to Vote on Estate TaxMarch 23, 2016
NSBA recently signed onto a coalition letter to Senate leadership supporting and urging a vote on H.R. 1105, the House passed—NSBA supported—Death Tax Repeal Act of 2015. The House passed Rep. Kevin Brady’s (R-Texas) legislation on a bipartisan basis last April which marked the first time in ten years that either body of Congress cast a vote on this important issue, signifying a major milestone in returning the issue of estate tax repeal back to the forefront of the tax policy debate.
The letter—signed by more than 100 organizations—encourages the Senate to take the next step in the legislative process by bringing the House passed legislation to the floor for a vote. Senator John Thune’s (R-S.D.) mirror legislation to the House passed bill, S.860, has already amassed support from the majority of the Republican caucus, with more than 38 cosponsors. In fact, Senate Majority Leader Mitch McConnell (R-Ky.) is a cosponsor of the Senate measure that would repeal the estate tax, and a proposal to do just that passed during the Senate budget vote-a-rama last year—though short of the 60-vote threshold.
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—the 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.
Although, there has been no indication that a binding vote is expected in the Senate in the coming months, especially with the shortened legislative calendar, NSBA’s members have consistently identified permanent repeal of the estate tax as one of their most pressing concerns. NSBA has long argued that 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.