ISSUE BRIEF: Permanently Repeal the Death Tax
Death tax is unfair, support its permanent repeal!
The Issue:
In 2002, Congress passed, and President Bush signed into law, a major tax cut bill that eliminated the federal estate tax (the so-called "death tax") until 2010. Permanent repeal of the death tax is still needed to produce a fairer and less oppressive tax system.
Impacts on the West:
The death tax does great harm to family businesses and farms. Current estimates are that more than 70 percent of family businesses do not survive the second generation, and 87 percent do not survive the third generation. While there are many reasons for these high numbers, the death tax is certainly a contributing factor. It constitutes double taxation, limits economic growth, consumes significant resources in unproductive tax compliance activities, all while raising only a tiny portion of federal tax revenues. The Death Tax needs to be permanently abolished because it punishes the American values of saving and investment by penalizing individuals for passing property along to their family.
Status of the Issue:
The House of Representatives passed legislation in 2005 that would extend the estate tax repeal indefinitely. However, the legislation was never able to acquire sufficient votes to overcome a filibuster in the Senate.
In the 110th Congress, two bills have been introduced in the House that would permanently repeal the death tax, H.R. 411, introduced by Rep. Mario Diaz-Balart (FL) and H.R. 25, introduced by Rep. John Linder (GA).
The Senate promises to continue to be difficult territory for tax reform. In an effort to garner sufficient support, several Senators are reportedly still trying to develop a compromise bill that could acquire 60 votes in the Senate. A number of proposals have been floated, including one that would keep the estate tax structure in place, but permanently reduce the tax rate to 15 percent — the same rate that currently applies to capital gains and dividends. Another plan being discussed in the Senate would permanently limit the number of estates subject to the tax and reduce the rate dramatically, while leaving the tax in place for the wealthiest Americans.
Solutions:
- Congress should permanently repeal the death tax. Urge your Representative and ask them to support legislation (H.R. 411 and H.R. 25) that will repeal the death tax.
- Urge your Senators to support permanent repeal of the death tax.
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