The politically charged bill can have an impact for family-owned businesses.
The House passed a bill yesterday to repeal the politically divisive federal estate tax, otherwise known as the “death tax.”
The tax, which has existed since 1916, applies to property and assets that are transferred after an individual or business owner dies if that amount exceeds the exemption, currently at $5.43 million. Nearly half of an estimated 2.5 million family businesses expect a family member to take over the business, according to NFIB research.
“There’s nothing fair about taxing a person’s estate after they’ve spent a lifetime paying taxes,” said Amanda Austin, NFIB vice president of public policy. “Owners who’ve built up businesses that they want to live on shouldn’t have to worry about the government swooping in after they pass to tax the survivors.”
In an editorial for USA Today, Rep. Kevin Brady, one of the bill’s sponsors, and Rep. Steve Scalise, the House majority whip, said that the tax puts heirs in a position to sell their businesses and farms to pay for the tax. They also pointed out that it especially affects minority- and women-owned businesses.
Thirty four percent of NFIB members have spent money within the last five years to protect themselves and their heirs from estate tax liability, according to NFIB research. Fifteen percent of NFIB members expect to do so in the future. NFIB has been in favor of a full repeal of the tax and sent a letter to House members saying that it will be a key vote for this year’s session.
It is expected, however, that the Senate will not pass the measure. Pres. Obama’s administration has also threatened to veto the bill if it were to make it that far. One thing that does seem likely, though: This contested issue will play a role in political discussions as the country heads closer to the 2016 presidential election.
For more information on this issue, check out “Relief From the Estate Tax.”
