Repeal Death Tax, Save America
Last month, Sen. John Thune (R., SD) introduced the Death Tax Repeal Permanency Act (S. 2242) to abolish the federal estate tax. This bill is a companion to the House version H.R. 1259 introduced by Rep. Kevin Brady (R., TX).
The passage of these bills is critically important to small businesses in Frederick County and across the country.
According to 2009 U.S. Census Bureau data, Frederick County is home to 5,830 non-farm businesses with 82,305 employees. There are a few dozen large employers with more than 100 employees, but the vast majority of local employers are smaller businesses. Many of these smaller businesses are family-owned.
These bills would finally resolve the uncertainty surrounding estate planning for small businesses by eliminating the burdensome death tax once and for all. We’ve been talking about poor economic conditions for the past few years and the economy is just now starting to see slight signs of improvement. Congress should be looking for ways to incentivize small business expansion, not hinder it.
The estate tax forces small-business owners to devote considerable amounts of money developing estate plans and buying estate tax-related life insurance. The amount spent on estate tax preparation is actually a deterrent to business expansion, job creation and capital investment.
After disappearing in 2010, the estate tax could be locked in again this year with an exemption level of $5 million per person ($10 million per couple) and a top tax rate of 35 percent. However, beginning in 2013, the tax will return to pre-2001 levels with a $1 million exemption and a top rate of 55 percent if action isn’t taken. These discrepancies complicate estate planning and highlight the need for a permanent solution.
President Obama once again put his support behind the $3.5 million estate tax exemption and 45 percent estate tax rate in his 2013 budget proposal. This action is in keeping with his perpetual plans to “spread the wealth.”
The reality, however, is that many small employers who create jobs in their communities are struggling to stay in business. The days of opening your own business and getting rich quickly are long gone. If second and third-generation business owners are penalized with such significant taxes, many will simply shutter their doors to preserve any remaining personal wealth they may have accrued. Due in part to the death tax, roughly 70 percent of second-generation businesses are unable to remain in business. That number increases to 90 percent for third-generation businesses.
According to the American Family Business Foundation (AFBF), a repeal of the federal estate tax will help create more than 1.5 million jobs and protect 65,000 family businesses that are currently susceptible to the death tax.
Another AFBF study on the economic impact of the federal estate tax states that repealing the tax would add $119 billion to the country’s gross domestic product and boost the income of American workers by $79 billion.
Currently, more than 200 members of the House of Representatives have signed on to co-sponsor H.R. 1259. Maryland Congressmen Andy Harris (R., MD-1st) and Roscoe Bartlett (R., MD-6th) are among the co-sponsors.
If supporting small businesses and local job growth is important to you, please reach out to your representatives and let them know that you want them to support these bills and enact this legislation.