1 Jan 10: In 2001, Congress reduced the federal estate tax in stages so that it disappeared in 2010. As written, the law “sunsets” at the end of 2010, bringing back the original death tax rules in 2011 with a maximum 55% tax rate. Congress is considering a retroactive change so that certain estates will be taxed starting January 1, 2010. The death tax is an extremely inefficient tax that raises little revenue. People who are very wealthy can pay large fees to estate-planning lawyers and accountants so that they will avoid or minimize the tax. Those without the financial resources for advanced estate planning will have to pay.
The tax is based on the fair market value of property owned at death, i.e., the price that the property could bring if it were sold on the open market. When the death tax was in force, it was not uncommon for estates of small business owners and farmers with high-value assets but limited cash, to be forced to sell the estate’s assets in order to pay the tax. Parents worked all their life for their children and then couldn’t pass on what they had to their children. The death tax penalizes those who attain wealth through frugal saving and investing, and rewards government consumption.
Repeal of the death tax would allow entrepreneurs to invest more in their businesses, increasing jobs and wages, thereby helping the economy. Government policies should help businesses create jobs, not hinder them.
In the U.S. House of Representatives, I will work to repeal the estate tax permanently.