Estate & Gift Tax (Death Tax)

Permanent repeal of the estate tax (“death tax”) is a priority. The current estate tax system can deplete the estates of those who have saved for their entire lives, force family businesses to liquidate and lay off workers, and motivate people to make financial decisions for estate tax purposes rather than for business or investment reasons.

Family-owned businesses should not be punished because they are successful or because their owners die. The United States is the land of opportunity, encouraging free enterprise and rewarding entrepreneurs. The estate and gift taxes run contrary to this basic philosophy.

Background

Death tax repeal--phased in over a 10-year period--was approved as part of the Economic Growth and Tax Relief Reconciliation Act of 2001 signed into law (Public Law 107-16) on June 7, 2001.

The measure would significantly raise the unified credit exemption from $675,000 to $3.5 million and would protect heirs of family businesses and farms that are land or asset rich and cash poor from having to sell the firm to pay taxes.

The estate gift and generation-skipping transfer tax is very complicated and planning can be very difficult and expensive--all for a tax that currently generates little more than 1% of the total federal budget. Nonetheless, the maximum marginal tax rate on estates can still effectively be a stifling 60%.

The Economic Growth and Tax Relief Act of 2001 (Public Law 107-16) phases down the estate tax through 2009 and fully repeals it in 2010. Because of Senate budget rules, however, the Act expires at the end of 2010, and the estate tax comes back into full bloom starting in 2011.

U.S. Chamber Position

A priority for the U.S. Chamber during the 109th Congress is to make the Bush tax cuts permanent, especially the provisions eliminating the estate tax.