The National Retail Federation urged the House of Representatives to pass legislation that would make repeal of the federal estate tax permanent. NRF will count today's consideration of H.R. 8, the Death Tax Repeal Permanency Act of 2005, as a key vote in NRF's annual ranking of lawmakers on issues important to the retail industry.
“The estate tax is a punitive measure that makes it extremely difficult for family owned businesses to be passed on to the next generation,” NRF Vice President and Tax Counsel Rachelle Bernstein said. “The loss of a loved one is tragedy enough – families shouldn't lose the business that provides their livelihood as well. Congress took a great step forward in 2001 by passing legislation to phase out this counterproductive tax. But all the progress made in this area will be lost if the tax is allowed to return to its original levels only a year after the phase-out is complete.”
“The phase-out was welcome but it made a nightmare out of estate planning,” Bernstein said. “There are huge differences in tax liability depending on the year in which a business owner dies, especially in the difference between 2010 and 2011. Fundamental fairness dictates that Congress act to ensure that parents and children be allowed the predictability that permanent repeal would provide.”
The estate tax is being phased out as part of a $1.35 trillion tax relief package signed into law by President Bush in 2001. The repeal becomes complete in 2010 but would last only one year, with the tax returning to pre-2001 levels in 2011. The estate tax phase-out was one of several provisions of the 2001 law passed on a temporary basis because of budget constraints and Senate rules. Lawmakers indicated at the time, however, that they hoped to make the cuts permanent in the future, and Bush has called for the cuts to be made permanent in both of his last two State of the Union addresses.
The House is scheduled to vote today on H.R. 8, the Death Tax Repeal Permanency Act of 2005, sponsored by Representative Kenny Hulshof, R-Mo. The measure would allow the estate tax to continue to be phased out until repeal is complete in 2010, and then make the repeal permanent. NRF sent a letter to House members
Tuesday urging them to support the legislation and noting that it would be counted as a key vote.
NRF was a member of the steering committee of the Family Business Estate Tax Coalition, which worked to have phase-out included in the 2001 legislation. Because of the estate tax, 70 percent of family owned businesses do not survive in the second generation and 87 percent do not make it to the third generation.
