The Family Business Estate Tax Coalition and more than 50 associations recently signed a letter addressed to U.S. Reps. Randy Feenstra (R-IA) and Sanford Bishop (D-GA) expressing support for the proposed Death Tax Repeal Act of 2024.
“Historically, the FBETC has supported increased estate tax exemption thresholds indexed for inflation, permanent lower tax rates, and provisions for spousal transfer and stepped-up basis,” the FBETC letter said. “Additionally, the FBETC supported the temporary estate tax relief in the Tax Cuts and Jobs Act (TCJA), which doubled the exemption to approximately $12.9 million for tax year 2023 and indexed future increases for inflation through 2025. These changes represent significant relief to family-owned businesses from the estate tax.”
The letter states concern about the expiration of the TCJA at the end of 2025. The expiration increases uncertainty and planning costs for businesses, it said.
“While the FBETC supports making the estate tax provisions of TCJA permanent, the FBETC continues to believe that repeal is the best solution to protect all family-owned businesses from the estate tax,” the letter said.
During a Dec. 6 Ways and Means subcommittee meeting, Feenstra also raised concerns about the ending of the TCJA.
“The thing about the death tax, it’s actually a pilfer tax, meaning that the federal government and the states, some states, have actually taken their arm into the grave and digging that person up and saying you owe tax,” Feenstra said. “I mean that’s how bad this is. It’s a double tax…I’ve got a bill that is going to eliminate the death tax. We’ve done some work obviously with the Tax Cuts and Jobs act to extend it or to increase it but that will go away also.”
The U.S. Chamber of Commerce, Society of Collision Repair Specialists, Auto Car Association, American International Automobile Dealers Association, National Automobile Dealers Association, National Small Business Association, National Federation of Independent Business and the American Farm Bureau Federation (AFBF) are among those who signed the letter.
Dustin Sherer, AFBF director of government affairs, said the bureau has a long-standing position on repealing the estate tax. He said there are added incentives this year to pay attention to estate tax issues.
If the TCJA expired, farms would be subject to taxes set at the current land value, he said. This would be equally true for those in the collision repair business who own their property.
“It is especially important right now because land prices have shot through the roof,” Sherer said. “These farms don’t have millions of dollars invested they can liquidate. You are talking about people passing land from one person to another.”
There have been concerns about the estate tax following the U.S. Department of Treasury’s release of its Greenbook in March, as Repairer Driven News previously reported.
The Greenbook omits a proposal to increase the tax rate for estate taxes, gift taxes, or generation-skipping taxes, Jeffery Levin, senior partner at Squire Patton Boggs, previously said. He said the proposed legislation lacks mention of reducing lifetime exemption amounts.
He said the Biden administration is proposing to remove the stepped-up basis through a proposal that would see transfers at death, with certain exceptions, become income recognition events.
“The proposed change would be that when the asset transfers, either at death or by lifetime gift, if it transferred to anybody other than my spouse or to charity, that’s an income tax recognition that it’s treated for income tax purposes, as if, I had sold the asset for its fair market value,” he said.
He added that there would be an exemption that could exclude recipients from current gain recognition of up to $5 million cumulative during their lifetime.
In other words, with some exceptions, the Biden administration’s proposal would see that anytime there is a transfer of wealth, it would trigger a tax.
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