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| House Passes Wilson-Cosponsored Bill to Reduce Death Tax |
June 22, 2006 |
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Reduces Burden on Estates of Farmers & Small Business Owners; Allows Better Estate Planning
Washington, DC – Congresswoman Heather Wilson, a member of the House Energy and Commerce Committee, today announced she has cosponsored the Permanent Estate Tax Relief Act of 2006 (H.R. 5638), which was passed 269-156 today in the U.S. House of Representatives.
“Government policy should encourage job creation. Forcing a family to sell off a business or farm just to pay this tax is counterproductive,” Wilson said.
The 30-year experiment with the death tax in the U.S. shows it falls disproportionately on family-owned farms and businesses, the very same small businesses that create seven out every 10 new jobs in America. Also, the number of minority-owned businesses is surging in recent years, meaning more and more of this tax burden will fall on these families unless this action is taken.
“Right now, decision-making for families is complicated because the tax rate automatically soars in 2011 with a sunset provision,” Wilson said. “A farmer or business owner ought to be able to plan for their family now based on a consistent tax policy.”
Federal revenues from taxes are at record highs, and the Congressional Budget Office estimates that estate tax receipts in the next five years will only amount to 1.2 percent of this revenue stream.
The compromise legislation does not fully repeal estate taxes and retains a progressive rate. It protects small businesses and farms by exempting estate assets worth up to $5 million so that family owners are not forced to sell facilities and equipment, or cut jobs, to pay the tax. However, under this bill, assets above $5 million are taxed at the capital gains tax rate of 15 percent, and that tax rate doubles to 30 percent on estate values above $25 million.
From 1995 to 2004, IRS data shows the majority of these unfair tax costs fell on estates with non-corporate business or farm assets.
Wilson voted to repeal the death tax on April 13, 2005, when it passed the House but did not become law. In 2001, Wilson supported the Economic Growth and Tax Relief Act which gradually reduced the rate through 2010.
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