House measure increases exemptions for farmers and small businesses
Washington, D.C. - Idaho Congressmen Mike Simpson and C.L. “Butch” Otter joined fellow members of Congress in providing permanent taxpayer relief from one of our nation’s most onerous taxes – the Estate Tax. H.R. 5638, the Permanent Estate Tax Relief Act of 2006 (PETRA), passed the U.S. House of Representatives with a vote of 269-156.
“Americans pay taxes on their assets and income their entire life and should not be taxed again upon death, it is that simple, we should not have double taxation,” said Simpson. “No family should be burdened with a new, onerous tax while grieving a loved-one and planning a funeral. There are things in this world that demonstrate a clear difference between right and wrong – and taxing someone for dying is just plain wrong.”
“Losing a loved one is a terrible thing. Losing a loved one’s life work adds insult to injury. Nobody likes paying taxes, but most of us accept that it’s part of our working life. For many of us, building a family farm, ranch or business as a financial legacy for the next generation is a big part of the American Dream,” said Otter. “The death tax puts the interests of government ahead of that dream by laying a second claim on what our loved one earned during their lifetime. We should be trying to encourage families to take care of one another. Instead, we’re giving hard-working, successful people an incentive to spend their assets now rather than building their family’s future. Once and for all, let’s give tax collectors something better to do than stand outside cemeteries.”
Small businesses and family farms are especially vulnerable to Estate Taxes because most have the entire value of their business and farm in their estate. H.R. 5638 increases the exemption amount to $5 million per person, and $10 million per couple, effective January 1, 2010.
By permanently increasing exemptions from the Estate Tax, H.R. 5638 will simplify tax law and facilitate more efficient long-term financial planning for business owners, farmers, and families.
Under current law, the Estate Tax is being phased-out gradually through 2010. However, in 2011, the tax reemerges in yet another form leaving taxpayers to plan for three possible scenarios - pre 2010 when the exemption levels are gradually increasing and the top grate gradually decreasing 2010 when the tax is completely repealed or 2011 when the tax reemerges. By making death tax relief permanent, taxpayers will have the certainty they need to make long-term financial planning decisions.
The legislation also creates a 60 percent deduction for qualified timber capital gains. This deduction alleviates the disparate tax treatment of timber gains under current law and makes timber companies more efficient and competitive against foreign importers.
H.R. 5638 will now be sent to the U.S. Senate for consideration.
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