Tuesday, 01 December 2009 11:11
Officially, it's known as the Estate tax. In small business and agricultural circles, we call it the Death Tax. But for as many times as it's died and reappeared, maybe a more appropriate name would be the Zombie Tax.
Whatever you call it, once again the House of Representative is preparing to vote this week on whether or not to make the Death Tax permanent.
Currently, every American has a $3.5 million exemption from the Death Tax, and any excess is taxed at a 45 percent rate. Under the Economic Growth and Tax Relief Reconciliation Act of 2001(EGTRRA) the estate tax law is scheduled to be repealed as of January 1, 2010. However, EGTRRA expires at the end of 2010, which will cause the estate tax rules to revert back to pre-2001 rates.
Therefore, beginning in 2011, the top marginal estate tax rate will be 55 percent and the estate tax exemption will be only $1 million (plus adjustments for inflation). Congress is scrambling to prevent that from happening.
On Thursday, the House will vote on HR 4154, the Pomeroy Estate Tax bill, which preserves the tax's current 2009 parameters. Unfortunately, those rates are not indexed for inflation, meaning that every year more businesses and families would fall victim to the tax. It's not a sustainable plan.
However, if the House passes the bill, the Senate will then be able to take it up, and hopefully make some needed changes to the legislation.
While AIADA views full repeal of the Death Tax as the only satisfactory resolution to this decade-long battle, we recognize that it is unlikely to occur at this time. For that reason, our association has joined the Family Business Estate Tax Coalition (FBETC) in pushing for a permanent extension of the estate tax at a reduced rate.
AIADA and the FBETC support the House's Berkley-Brady-Davis-Nunes estate tax bill which was introduced earlier this year. And as the legislation moves into the Senate AIADA would support the Senate's Lincoln-Kyl estate tax legislation. The Senate bill - offered as an amendment - passed the Senate floor with a majority of votes during the budget proceedings, would provide family businesses with permanent relief by reducing the top rate to 35 percent and increasing the exemption to $5 million. The House legislation would set the same parameters. While we would prefer to see a full repeal, this amendment is vastly preferable to a return of the full tax in 2011.
AIADA will continue to keep dealers updated as Death tax legislation moves forward in Congress. Our message is clear: Congress needs to give small business owners and our families a break. They need to give us the chance to pass on our businesses, keep our valued employees and customers, and continue paying income taxes - instead of forcing our families to sell our stores to pay the Death Tax.
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