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Scrapping Death Tax Would Benefit Small Businesses
Author: Scarinci Hollenbeck, LLC
Date: April 13, 2015
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On March 25, Sen. John Thune (R-S.D.) reintroduced legislation that would permanently eliminate the federal estate tax. In a statement released the same day, Thune lamented the challenges faced by small businesses and emphasized the job creation that could result from ending the federal estate tax.
Potential economic stimulus
“Currently more than 70 percent of small businesses do not survive to the second generation, and 90 percent of family businesses do not survive to the third generation,” said Thune. “According to a study by former CBO Director Douglas Holtz-Eakin, repealing the death tax would create 1.5 million additional small business jobs and would shave almost a percentage point off the unemployment rate.”
The bill, which carried the title the Death Tax Repeal Act of 2015 and was identical to a separate piece of House legislation proposed by Rep. Kevin Brady (R-Texas), quickly gained support in the Senate. On March 26, Thune lauded his fellow Senators for voting to incorporate his amendment into the Fiscal Year 2016 budget resolution.
While their vote was non-binding, it did show their support for the bill, according to The Hill. As of March 31, 27 senators had endorsed Thune’s proposed legislation. In addition, several industry representatives backed the bill, including the National Federation of Independent Business, the National Association of Manufacturers and The Association for Manufacturing Technology.
Broad support
The Family Business Estate Tax Coalition, a group of more than 50 organizations that support repealing the estate tax permanently, penned a letter to Rep. Sanford Bishop and Brady, thanking them for introducing the House version of the bill, H.R. 1105.
“The FBETC supports the provisions in the American Taxpayer Relief Act of 2012 including a $5 million estate tax exemption, indexed for inflation, permanent lower tax rates and provisions for spousal transfer and stepped-up basis,” the letter stated. “While these changes represent significant reform to the estate tax rules, the FBETC continues to believe that repeal is the best solution to protect all family-owned businesses from the estate tax.”
While these bills may pass the House and Senate, any final piece of legislation could face challenges receiving the approval of President Barack Obama, as he recently proposed increasing estate taxes.
- Practices: Tax and Trusts & Estates
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
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