Death Tax Takes a Permanent Holiday
Death Tax Takes a Permanent Holiday
April 15, 2005
This week I joined a broad bipartisan majority of my House colleagues to permanently end the Death Tax (H.R. 8). The tax, officially known as the Estate Tax, taxes the inheritance that a family member receives from a deceased loved one. Because it taxes death, it is one of the cruelest and most unfair taxes ever created by the federal government.
The Death Tax began in the United States in 1916 as a means to pay for World War I. It was maintained in the 1920s and 1930s to prevent concentrations of wealth. The Death Tax took a holiday when Congress had the wisdom to begin phasing it out in 2001. However, in order to pass the legislation, it contained a "sunset clause," which meant that unless Congress acted, the Death Tax would return to its original levels in 2011. If the Death Tax was unfair and unjust between 2001 and 2010, it will be also be unfair and unjust in 2011 and beyond.
This tax has been particularly burdensome for farmers and small businesses because most have the entire value of their businesses and farms in their estates. The threat of the Death Tax forced small-business owners to pay for expensive estate planning if they want to keep their business in the family.
One such business, here in Ohio's Third District, is Ross Motor Cars, in Centerville. Jenell Ross, Vice President of the company, tells a very compelling story and even came to Washington to testify before a Senate panel this week. Ms. Ross' story was printed in an ad, in many papers commonly read by legislators on Capitol Hill. The copy read:
"Thirty years ago, my father took the chance of a lifetime. Determined to achieve the American Dream, he invested everything he had into Ross Motor Cars. Like a lot of people, my father thought he would live forever.
He didn't.
When he died unexpectedly in 1997, the overwhelming responsibility of keeping the family business afloat fell squarely on the three of us. But the complexities of managing the family business paled in comparison to what was to come.
We could never have prepared ourselves for the shock of receiving a tax bill for nearly half the value of the dealership, nearly 90% of which was tied up in non-liquid assets such as inventory, equipment, buildings and land.
For the past eight years, my mother has met weekly with a team of lawyers and insurance agents to make sure our Death Tax repayment plan remains viable and our dealership remains solvent.
It hasn't been easy.
Not a day has gone by over the past eight years in which we haven't been haunted by what could have happened - not only to our family business, but also to our 145 employees whose families depend on us."
The Death Tax represents double taxation; once when the income was originally earned and again upon the event of death. Taxing death unto itself is morally troublesome. Further, there are litanies of statistics about how many family farms and family-owned small businesses the Death Tax hurts, as well as how many jobs would be created if it did not exist. Although I had already planned to vote for the permanent repeal of the Death Tax, the Ross family story helped to humanize my decision.
It is appropriate to eliminate this tax during the week Americans must complete their income tax returns. While April 15th is the dreaded day income taxes are due, April 17th is this year's "Tax Freedom Day." That is the day when Americans' combined earnings for the year equals their combined collective tax burden. Up until now, Americans have been working to pay our collective tax bill. While this is an improvement over 2000, when Americans worked until May 3rd to pay our national tax bill, we still carry a heavy tax burden. Pending Senate action, and the President's signature, the Death Tax will no longer be on the long list of taxes Americans must consider.
http://www.house.gov/miketurner/news/columns/4.15.05.shtml