Many small businesses must be liquidated piece by piece or sold outright in order to secure cash to pay the Death Tax. Still other businesses are forced to take out loans or forgo reinvesting capital into their business in order to meet the tax demand. Worse yet, small business owners are not the only ones impacted. Jobs and communities are often hurt when the Death Tax takes its toll.

 

Regardless of whether or not a small business is hit directly with the Death Tax penalty, thousands of small businesses are impacted each year by expensive fees paid to attorneys, accountants and life insurers necessary to prepare for an eventual Death Tax debt. In the end, many family petroleum marketing businesses are forced to sell their business to a national chain in order to allow the business to continue. Slowly, this tax is killing the very "corner gas stations" that have long served communities and been dedicated to local service.

 

S. 275, the "Estate Tax Elimination Act of 2001" was introduced by Senators Jon Kyl (R-AZ) and John Breaux (D-LA) on February 7, 2001 and quickly gained bipartisan co-sponsorship. S. 275 calls for immediate repeal of all estate, gift and generation skipping taxes; provides for a $2.8 million per individual limitation in order to preserve step-up in basis treatment for certain inherited assets (totaling $5.6 million per couple); permits the recipient of property inherited to determine voluntarily when the taxable event will occur, i.e. - if they choose to liquidate assets then they pay the capital gains tax. If they don't liquidate and choose to employ the asset, zero tax is paid at that point; and provides that the rate of tax imposed on the subsequent sale or disposition of such property by the recipient will be the applicable capital gains tax rate, most likely 20 percent.

 

On the House side, HR 8, the "Death Tax Elimination Act of 2001" has been introduced by a bipartisan groups of legislators, including Reps. Jennifer Dunn (R-WA) and John Tanner (D-TN), and calls for Death Tax repeal to be phased in beginning in 2001 and taking full effect in 2010.

PMAA Staff Contacts:

        Sarah Dodge, Director of Legislative Affairs