The Chamber

The federal estate tax, commonly referred to as the Death Tax, is a tax on the estate of a deceased person.  Essentially, taxpayers are paying double taxes as they build their estate and then again as they pass it on to the next generation.  The Death Tax acts as a major hurdle, if not outright barrier, to passing down family owned small businesses to future generations. 

As part of the 2001 Economic Growth and Tax Relief Act, the threshold amount at which the Death Tax is applied was increased and the tax rate was decreased, with outright repeal of the tax in 2010.  The repeal of the tax was set to sunset after just one year, with the death tax going back into effect at the 2001 levels starting in 2011.  As part of a larger tax package signed into law in December 2010, the death tax was re-instituted for 2011 and 2012 at a top rate of 35% and an exclusion amount of $5 million.  

The threat of the death tax forces families to pay for costly estate planning or possibly even selling some the business’ assets in order to ensure they are able to keep the business in the family.  Permanently repealing the death tax would allow family business owners to focus their resources on growing their business and creating jobs.

Status of Legislation:  Several bills (H.R. 177, H.R. 1259) to make repeal of the Death Tax permanent have been introduced in the 112th Congress. 

IEC’s Position: IEC supports legislation to permanently repeal of the Death Tax.

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