House Votes This Week on Killing the Death Tax
Repeal of 60 percent Tax Penalty Would Keep Family Farms in the Family
House Agriculture Committee Chairman Larry Combest (R-TX) said farming and ranching families would welcome the reduction of tax rates and repeal of the federal estate, gift, and generation-skipping transfer tax over the next 10 years. "The Death Tax Elimination Act" (H.R. 8) is scheduled for a vote this week by the U.S. House of Representatives.
"When the owner passes away, the family farm passes to the next generation with a tax penalty totaling as much as 60 percent, and the choice between keeping the family business or selling it just to pay the taxes, and that's not right," said Combest.
The estate tax is commonly referred to as the "death tax," since it is generally triggered solely by death. Except for changes in the schedule, the tax repeal takes almost the exact approach to repealing the death tax that Congress included in last year's Taxpayer Refund and Relief Act of 1999 that was vetoed by President Clinton. If the president would sign death tax repeal into law, families could benefit by $28.3 billion in tax relief over five years.
The legislation reduces rates and repeals the federal estate, gift, and generation-skipping transfer taxes over 10 years. The plan would also simplify portions of the generation skipping transfer tax rules prior to repeal.
The bill would begin a reduction of the tax immediately and eliminate it completely in 2010. It would also maintain stepped-up basis on up to $5.6 million of assets. If the bill were to become law, all family operations would retain stepped-up basis for $1.3 million of assets and heirs to larger family farms or ranches could choose which assets retain the step-up in basis.