The federal estate tax, also known as the death tax, inhibits business owners’ and farmers’ ability to pass their operations on to future generations because of the steep taxation applied to the inheritance. It’s been a concern for some legislators and has been brought up several times in the legislature before.
U.S. Sen. Chuck Grassley of Iowa, who serves as chairman of the Senate Finance Committee, has teamed up with Sen. Majority Leader Mitchel McConnell of Kentucky, Sen. Majority Whip John Thune of South Dakota, and several other senators to reintroduce legislation that would permanently repeal the federal estate tax and pave the way for families and others to successfully pass down an enterprise.
“Congress ought to do everything possible to encourage family enterprises to get next generations involved and keep the doors open for business,” Grassley said in a statement. “It’s getting harder all the time to keep a farm or small business in the family from one generation to the next. The estate tax doesn’t serve any purpose except forcing family farms and family-run businesses to waste precious capital on costly tax planning and in too many cases, paying taxes on income or property that have already been taxed once.”
Grassley explained that instead of sending the taxes gleaned from the death tax to Washington, D.C., it would be better to allow family operations to keep that money and invest in their own local communities that would then turn around and help create new opportunities.
Called the Death Tax Repeal Act of 2019, the team of legislators really hope to make progress this time around. Thune tried to repeal the state tax in 2017 as it piggybacked onto the Tax Cuts and Jobs Act. The final version of that particular act did not repeal the death tax, but instead the law doubled the individual estate and gift tax exclusion to $10 million and then to $11.4 million in 2019 through 2025.
“Although we made great progress during the Tax Cuts and Jobs Act negotiations, the death tax still remains an onerous and unfair tax that punishes hard-working families,” Thune said in a statement.
McConnell described the death tax as the government’s “final insult to force grieving families to visit both the undertaker and the IRS on the same day.”
According to The Hill, this bill faces big hurdles in becoming a law because it would need 60 votes to pass out of the Senate and likely would be unable to pass through the House, which is heavily Democratic.
In addition to Grassley, McConnell, and Thune, the bill is being co-sponsored by U.S. Sens. Lamar Alexander of Tennessee, John Barrasso of Wyoming, Marsha Blackburn of Tennessee, Roy Blunt of Missouri, John Boozman of Arkansas, John Cornyn of Texas, Tom Cotton of Arkansas, Kevin Cramer of North Dakota, Mike Crapo of Idaho, Ted Cruz of Texas, Steve Daines of Montana, Joni Ernst of Iowa, Deb Fischer of Nebraska, Cory Gardner of Colorado, John Hoeven of North Dakota, Cindy Hyde-Smith of Mississippi, James Inhofe of Oklahoma, Johnny Isakson of Georgia, John Kennedy of Louisiana, Jerry Moran of Kansas, David Perdue of Georgia, Jim Risch of Idaho, Pat Roberts of Kansas, Mike Rounds of South Dakota, Marco Rubio of Florida, and Todd Young of Indiana.