While death and taxes are two facts of modern life, death by taxes may soon be less of a worry for small and medium-sized family-owned manufacturers. During last week’s budget “Vote-a-rama,” where hundreds of amendments were offered and considered, Senator John Thune (R-SD) proposed S. AMDT. 607 to reintroduce his plan to repeal the “death tax.” This macabre term is given to the burdensome estate tax on an owner’s right to transfer property at his/her death. (continue reading…)
Tag: estate tax
It’s long been said that the only two things certain in life is death and taxes. Well, for too many family owned businesses this certainty is compounded by the long reviled death tax which is a burden to all successful family-owned businesses. That’s why the National Association of Manufacturers (NAM) applauds Chairman Ryan and the House Committee on Ways and Means for their prompt consideration of H.R. 1105 “Death Tax Repeal Act of 2015”. The bill introduced by Representatives Brady (R-TX) and Bishop (D-GA) issues would finally, fully repeal the death tax. (continue reading…)
A bicameral, bipartisan effort to fully repeal the estate tax was unveiled June 19 when Reps. Kevin Brady (R-TX), Mike McIntyre (D-NC) and Senator John Thune (R-SD) simultaneously introduced the Death Tax Repeal Act of 2013.
For small and medium manufacturers, the burden of the death tax is not only felt when property is transferred at death, but annually — with estate-planning costs averaging $94,000 a year. Manufacturers know that funds currently used to prepare for the estate tax could better be spent on business investment, expansion, and job creation.
Before Congress reached a deal to avert the fiscal cliff, maximum estate tax rates were set to skyrocket up to 55% this year. The American Taxpayer Relief Act of 2012 provided welcome relief by providing a permanent estate tax provision with a $5 million exemption (adjusted annually for inflation) at a 40% maximum rate.
Still, full repeal of the death tax would give small and medium manufacturers – many of which are family-owned – the certainty of knowing their companies will not need to be liquidated or sold to cover estate taxes.
The NAM applauds the introduction of S. 1183 in the Senate and H.R. 2429 in the House, and joined over forty organizations in thanking the sponsors of the Death Tax Repeal Act of 2013. To read the Senate letters click here and here.
Sen. Jon Kyl (R-AZ) on Thursday announced he would not seek re-election in 2012. The Wall Street Journal touched bases with the NAM’s Dena Battle, who shared the association’s appreciation with Sen. Kyl’s long and effective involvement on the estate tax issue.
“We’ve had a lot of champions from both sides of the aisle for death tax repeal over the years, but Senator Kyl has clearly been the leader,” said Dena Battle, a lobbyist for the National Association of Manufacturers, using opponents term for the tax. “In terms of both policy and keeping the stakeholders together, Kyl led the charge.”
Sen. Kyl supported NAM’s “Key Vote” positions on manufacturing issues 92 percent of the time during the 111th Congress. He’s a strong supporter of industry and business, and we look forward to continue working with him over the next two years.
Your correspondent has been taking a German class at the Goethe Institute and part of our classwork involves watching and discussing an excellent TV series broadcast by the ZDF network, “Die Deutschen.” Last week the subject was Thomas Müntzer (1489-1525), an Evangelical preacher who broke with Luther over social issues. Müntzer became a leader of the Peasants War demanding more rights from the nobility, such things as the abolition of serfdom. The revolt was put down, Müntzer was tortured and executed.
A monument from the uprising is the 12 Articles of the Peasant Revolt of 1525, the demands of the peasants of Memmingen against the Swabian League, a document that stands as one of the first declarations of human rights. No. 10 stood out:
Soll der Todfall ganz und gar abgetan werden, und nimmermehr sollen Witwen und Waisen also schändlich wider Gott und Ehre beraubt werden.
Which is to say:
The death tax should be completely abolished, and never more shall widows and orphans be robbed of their inheritance contrary to God and Honor.
No messing around with 45 percent rates or 100 Mark exemptions. Abolishing the death tax was considered a basic human right.
This bipartisan effort was prompted by the fact that tax rates for every American were poised to automatically increase on January 1st. If that had come to pass, the average middle-class family would have had to pay an extra $3,000 in taxes next year. That wouldn’t have just been a blow to them — it would have been a blow to our economy just as we’re climbing out of a devastating recession….[snip]
And millions of entrepreneurs who have been waiting to invest in their businesses will receive new tax incentives to help them expand, buy new equipment, or make upgrades — freeing up other money to hire new workers.
Putting more money in the pockets of families most likely to spend it, helping businesses invest and grow — that’s how we’re going to spark demand, spur hiring, and strengthen our economy in the New Year.
Senate Republican Leader Mitch McConnell (R-KY), who attended Friday’s ceremony and who took the lead in gaining the tax concessions from the President, a Senate floor statement:
I’m pleased to report two pieces of good news out of Congress today. After two years of policies that lacked public support, the tide is beginning to turn.
Today the President will sign a bill that ensures no American gets a tax hike on January 1. Republicans have fought hard for this legislation. Up until last week, most Democrats resisted. But in the end the American people were heard. And that’s a welcome change from the past two years.
The other piece of good news, McConnell said, was Senate Majority Leader Reid’s decision to withdraw the 1,924-page, $1.2 trillion omnibus bill.
The absence of Reid and Speaker of the House Nancy Pelosi prompted much commentary in the blogosphere, as in the Politico piece, “Pelosi and Reid skip bill signing.” Robert Costa of National Review Online has an informative report on the ceremony, “A Tax Deal, and Rev. Al,” a reference to Al Sharpton’s attendance.
Executive Vice President Jay Timmons of the National Association of Manufacturers issued a statement, “Manufacturers: Tax Relief Will Spur Economic Recovery and Job Growth.”
And coverage/commentary with a manufacturing focus:
- Plastic News, “US manufacturers encouraged by two-year extension to federal tax cuts“
- AOL Daily Finance, “The Compromise Tax Bill: Why Something Was Better Than Nothing“
- Chemical and Engineering News, “Tax Deal Benefits R&D: Economy: Bipartisan measure will boost investments and create jobs, industry says“
- Window & Door, “Congress Pares Back Tax Credits for 2011“
- AP, “Obama Meets with Union Leaders on Tax Cuts“
- Agriculture Online, “Biodiesel industry finally gets good news“
- New York Times, “Estate Tax Will Return Next Year, but Few Will Pay It“
Rep. Dave Camp (R-MI), the next chairman of the tax-writing House Ways & Means Committee, kindly mentioned the National Association of Manufacturers and other business trade associations in his floor remarks Thursday in support of H.R. 4853, the tax compromise. Excerpt:
Let’s be clear – this is a bill about taxes – long standing tax policy for that matter – and preventing a tax hike. It isn’t about spending. Over 90 percent of this bill is tax policy – and that policy is aimed at preventing a tax hike for families and employers or providing direct tax relief to American workers.
It also protects family farms, ranches and businesses from being hit by a destructive “Death Tax” that will go as high as 55 percent next year. Instead, this bill reduces that rate to 35 percent while increasing the exemption amount from $1 million to $5 million.
Now, I know $1 million sounds like a lot of money – and it is. But think about the family farmers in your districts, think about the cost of the big machinery it takes to operate and manage their lands – some of the combines I see every day in my district cost a quarter-million dollars each! That isn’t cash in the bank; that is equipment in the field and the federal government has no right to take half of it when mom or dad passes on. While I support a total repeal of the Death Tax, at least this bill makes significant improvements to the Estate and Gift taxes, and it deserves our support.
Members should also know and the American people should know that this bill does not contain “new” policy. New provisions were not snuck in late at night or behind closed doors. We took a firm stand against new policy. As a result, over 70 provisions – some of them my own – were excluded from this bill – well over $100 billion worth.
NPR interviewed Camp earlier this week, “New Chairman Of House Tax Panel Seeks Spending Cuts.”
House leadership has pulled the rule for consideration of H.R. 4853, the tax compromise, over liberal Democratic members’ unhappiness with how it would deal with a separate vote on the estate tax. The confusion may delay a final vote on the bill. (Reuters, WSJ blog.)
The delay allows us the opportunity to post the transcript from last night’s PBC NewsHour, which featured a debate over the estate tax between Rep. Kevin Brady (R-TX) and Rep. Earl Pomeroy (D-ND), the chief House backer of the higher tax rates. Brady did a good job of cutting through the rhetoric. Like the manufacturers, Brady supports a permanent repeal of death tax but regards the tax bill’s provisions as a compromise.
REP. KEVIN BRADY: Well, I think the death tax is wrong, and as close to a moral — immoral a tax as we have.
There’s something wrong about family farmers, family-owned businesses working their whole life to build up a nest egg, some of them working generations to do that, and then when they die have the government swoop in and take as much as half of everything that they have earned.
I think the death tax needs to go away permanently. Short of that, I think the common ground that was reached that exempts a lot of our family farms and family-owned businesses and taxes others at a 35 percent rate, that wasn’t created, that number didn’t come up from Washington.
That came from our local farmers, our local small business people, our local newspapers and grocery store owners, who said, if you can’t eliminate it completely, this will allow many of us to survive.
So I think that common ground is what we ought to stick with. And I don’t think 45 percent — I don’t think the government deserves half of what our hardworking Americans spent their life to build up.
And … (continue reading…)
The House is now debating H.Res. 1766, the rule for consideration of H.R. 4853, the tax compromise. Opponents have adopted — in some cases, for the first time — budget deficits as their defining political principle, while in the case of the estate tax indulging in some of the most bellicose class warfare rhetoric we’ve heard all session.
The argument against the estate tax compromise, that is, for welcoming the return of the full 55 percent estate tax rate with just a $1 million exemption, boils down to, “Wealthy! WEALTHY! Tax breaks for WEALTHY! Bad! WEALTHY!”
The National Association of Manufacturers has sent a “Key Vote” letter to the House calling for final passage of H.R. 4853. On the estate tax, the NAM’s Executive Vice President Jay Timmons wrote:
[NAM] members have consistently called for repeal or significant reform of the estate tax. We believe that the estate tax language passed by the Senate yesterday, which calls for a 35-percent tax rate and a $5-million exemption, represents significant reform. However, the estate tax provisions included in the amendment offered by Representative Pomeroy do not provide the reform needed to relieve manufacturers from the estate tax burden.
For small and medium-sized manufacturers (SMMs), business owners and families, the estate tax is more than a one-time tax. In a 2009 survey of our SMM members, respondents said they spent, on average, $94,000 annually on fees and estate-planning costs in preparation for their estate tax bill. This is money that could have been used to grow businesses and add jobs. Many small manufacturers and small businesses are seriously and adversely impacted by the estate tax. Higher rates lead to job loss.
The NAM has also prepared a ManuFact fact sheet on the anti-investment impact of the estate tax, AKA the death tax. It includes a fact we have not seen noted elsewhere lately: “According to the Joint Economic Committee (JEC), the death tax costs the economy more than it adds to federal revenues. It has generated $761 billion since 1942 while reducing the stock of capital in the economy by $847 billion. The May 2006 study by JEC, ‘Costs and Consequences of the Federal Estate Tax,’ found no compelling reason to continue to collect the tax and several compelling reasons to reduce or abolish it.”
NAM Key Votes are identified by a committee of NAM member companies of all sizes and are used to determine a member of Congress’ record on manafucturing issues.
The vote on H.R. 4853 (or more precisely, the motion to concur in the House amendment to the Senate amendment with Amdt. No. 4753 to H.R. 4853) was 81-19 in support. The margin of victory should provide momentum for passage as the House takes up the bill Thursday.
This is good legislation, a compromise with many more plusses than minuses in terms of jobs and economic growth. As the National Association of Manufacturers’ “Key Vote” letter in support of the bill summarized:
Manufacturers strongly support extending the 2001/03 tax relief to all Americans. Over 70 percent of U.S. manufacturers file as S-corporations or other pass-through entities; most would be significantly and adversely impacted by the higher tax rates that will take effect without congressional action. The non-partisan Congressional Budget Office estimates that fully extending the 2001/03 rates would add between 600,000 and 1.4 million jobs in 2011 and between 900,000 and 2.7 million jobs in 2012. Moreover, lower tax rates on capital gains and dividends will boost capital investment and economic growth.
The NAM has consistently called for repeal or significant reform of the estate tax. For small and medium-sized manufacturers (SMMs), business owners and families, the estate tax is more than a one-time tax. In a 2009 survey of our SMM members, respondents said they spent, on average, $94,000 annually on fees and estate-planning costs in preparation for their estate tax bill. This is money that could have been used to grow businesses and add jobs.
Renewal of the research and development (R&D) credit and other business extenders is critical to manufacturing competitiveness and should be extended. Manufacturers claim nearly 70 percent of the R&D credit, and R&D fuels innovation that translates into new products, increased productivity and jobs. Similarly, extension of deferral for active financing and the look-through rules will help U.S. competitiveness. Other extenders promote energy efficiency and make permanent important employer-provided education assistance. Moreover, the 100-percent expensing provision will create a positive ripple effect in the economy by encouraging investment and creating demand for machinery and equipment.
Update: From The Business Journals, “U.S. Senate approves Obama tax-cut deal“:
“The bill is a good first step to eliminate much of the uncertainty that has been holding back investment and job creation by manufacturers and the broader business community,” said Jay Timmons, executive vice president of the National Association of Manufacturers.