WASHINGTON, D.C. — The U.S. House of Representatives passed a measure last week repealing the federal estate tax; the body voted 240-179 in favor of the bill (HR 1105) on April 16.
The legislation – known as the Death Tax Repeal Act of 2015 – calls for ending the estate tax while maintaining stepped-up basis. A companion bill in the Senate (S. 860) was introduced last month by Sen. John Thune (R-S.D.) and has been referred to its Committee on Finance.
"We’ve pushed very hard to make sure the death tax never becomes a back-burner issue," said Kent Bacus, associate director of legislative affairs for the National Cattlemen’s Beef Assoc. "As long as there’s breath in the death tax, it remains a threat to every operation that’s out there."
The House bill was introduced in February by Rep. Kevin Brady (R-Texas). Under current law, the exemption for federal estate taxes is $5.43 million per person and $10.86 million per couple. Any amount over the exemption level is taxed at a graduated rate of 18-40 percent. The exemption has risen from $1 million in 2003 to $5 million in 2011. It has been indexed regularly for inflation since then.
President Barack Obama’s advisors would recommend he veto HR 1105 if it were presented to him, his administration has said, noting the bill is fiscally irresponsible and would add $269 billion to the federal deficit over 10 years.
Families and their businesses are burdened by the estate tax, said Rep. Ken Buck (R-Colo.).
"You shouldn’t lose the farm when you lose a loved one," he stated. "The death tax hurts the economy and families who have worked hard to build up their own businesses. This double-tax is un-American. The government takes from Americans as they work to save and build up their livelihoods only to slam them again with a death tax on their heirs."
The estate tax punishes families for living "the American Dream," said Rep. John Shimkus (R-Ill.).
"It’s long past time for the federal government to stop standing in the way of Americans who want to pass down their family farm to future generations," he explained. "The death tax hurts our rural economy by robbing us of these vital pillars of the community. It stifles growth, discourages responsible saving and ruins family businesses."
The chances for an agreement on estate tax legislation, or even Section 179 expensing, may depend in part on the political calendar, Bacus said.
"Over the next few months we’re going to see a lot of talk about tax reform," he explained. "Unfortunately, (2016) presidential ‘silly season’ is already starting. While that’s exciting, it does distract a lot from the efforts on Capitol Hill.
"I think if we don’t see tax reform by this summer, it’s going to be very tough to have anything through the rest of this Congress."
Section 179 of the federal code refers to the deduction of business expenses for investments such as property and equipment. From 2010-13, small businesses were able to immediately deduct up to $500,000, but last year, that amount was $25,000.
In December 2014, Section 179 and other tax extenders were approved by Congress to be retroactive for 2014, but not for future years. A bill making Section 179 permanent was passed by the House in February.
