House OKs Death Tax Repeal Act
April 16, 2015
The U.S. House of Representatives passed H.R. 1105, the Death Tax Repeal Act of 2015 today. The legislation would completely eliminate the 40 percent tax that applies to assets worth more than $5.4 million per individual, $10.9 million per couple.
The legislation passed with a vote of 240 to 179, with yeas from both parties. The bill will now move on to the Senate for further consideration. Last month, the Senate adopted Senator John Thune's (R-SD) amendment to the Fiscal Year 2016 budget resolution to create a deficit neutral reserve fund to eliminate the death tax.
While many in agriculture have felt the repercussions of the estate tax, the bill is cast in a different light in much of the mainstream media. The Huffington Post published the story under the headline: "House Votes To Repeal Tax On Richest 0.2 Percent Of Americans." The followed that up by saying, "The House of Representatives voted Thursday to give a tax break worth $269 billion to the richest few thousand estates in the country, and add that cost to the federal debt."
That's a perception the ag industry has been trying to change.
Philip Ellis, a multi-generational rancher from Wyoming, who is also the president of the National Cattlemen's Beef Association said, "When did it become appropriate to tax death? This is a punitive tax on farmers and ranchers that is inaccurately framed as a tax on the rich. The U.S. Department of Agriculture even names the death tax as one of the top contributors to the breakup of multigenerational farming and ranching operations."
The estate tax, as it's more properly referred to, was put in place 100 years ago, to pay for World War I. Todd Wilkinson, a cattle producer and attorney specializing in ag law and estate planning, said the tax's day is done. "I think the time for looking for people to pay for the federal government's mess with a tax on a transfer of assets is long past. They ought to repeal the thing and give us an even playing field with the rest of the country."
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"The estate tax is a disservice to agriculture because we are a land-based, capital-intensive industry short of funds, and with few options for paying estate taxes when they come due," said Ellis. "Unfortunately, all too often at the time of death, farming and ranching families are forced to sell off land, farm equipment, parts of the operation or take out loans to pay off tax liabilities and attorney's fees."
Texas and Southwestern Cattle Raisers Association second vice president Robert McKnight, a rancher from Fort Davis, Texas, has had more experience with the death tax than he would like. "As a seventh-generation cattleman who has dealt with the death tax on multiple occasions, I can tell you how emotional and frustrating it can be. I am pleased that the House took action today by passing the Death Tax Repeal Act. TSCRA appreciates Rep. Brady for his leadership on this legislation and we urge the Senate to promptly act on repealing the estate tax. Death should never be a taxable event," McKnight said.
April 14, the president released a Statement of Administration Policy regarding the bill, saying the Administration strongly opposes the bill, "which would add hundreds of billions of dollars to the deficit to provide large cuts exclusively to the very wealthiest Americans." The statement said the average tax cut would average more than $3 million, and that because of the large exemptions, over 99 percent of Americans, including nearly all small businesses and family farms, do not pay any estate tax.
The Joint Committee on Taxation estimates the repeal would add $269 billion to the federal deficit over 10 years.
The statement from the president reads, "The Administration has consistently supported tax relief for middle-class and working families…The Administration wants to work with Congress on fiscally responsible tax relief for middle-class and working Americans."
Many ag producers contend they fit that category, but are still subject to this tax.
"Many ranching families have worked hard and sacrificed to build operations to pass down to their children and grandchildren," McKnight said. "Too often, when it comes time for ranchers to pass their property along to the next generation, the death of a family member also comes with a hefty federal estate tax. Unfortunately, this expensive tax frequently forces ranching families to sell their land and equipment so they can afford to pay it. This also forces ranchers to lay off workers, creating a ripple effect that negatively impacts the entire economy."
The statement from the president said, "If the President were presented with H.R. 1105, his senior advisors would recommend that he veto the bill."