A bill to permanently repeal an estate tax that a group of legislators says has significant effects on family farms was introduced this week in the Senate, to join a similar bill already offered in the House.
Co-sponsor of the "Death Tax Repeal Act of 2015," John Thune, R-S.D., announced the bill Thursday with the help of Sen. Chuck Grassley, R-Iowa, and Reps. Kevin Brady, R-Texas, and Sanford Bishop D-Ga.
Also Thursday, Thune introduced an amendment to the Senate’s Fiscal Year 2016 Budget Resolution to create a deficit neutral reserve fund to eliminate the federal estate tax.
The estate tax imposes a tax rate as high as 40% on family businesses – including farms and ranches – which Thune's office said hurts economic growth and small business development.
Thune cited a 2012 study from the Republicans' Joint Economic Committee that suggests ending the estate tax would actually increase overall federal tax revenue by encouraging more investment. Another study by by former CBO Director Douglas Holtz-Eakin, Thune's office said, found that repealing the death tax would create 1.5 million additional small business jobs and would shave almost a percentage point off the unemployment rate.
The bill follows a hearing in the House Committee on Ways and Means last week, where stakeholders including farmers and ranchers shared testimony on how the estate tax has affected their farm businesses.
In that hearing, Bobby McKnight, a seventh-generation cattleman from Fort Davis, Texas, shared that he's had to cut staff to pay estate tax expenses. Farm Bureau member and Tennessee farmer Brandon Whitt also shared that his family had to sell off land to pay tax expenses. The land was later developed and cannot be recovered, Whitt said.
The bill also follows approval of the bill in the House Ways and Means Committee on Wednesday.
"Currently more than 70% of family businesses do not survive to the second generation, and 90% of family businesses do not survive to the third generation. This legislation will finally give farmers, ranchers and family business owners the peace of mind of knowing that they no longer have to spend substantial sums on planning to minimize their death tax liability," Thune said.
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"I believe there is now a majority in both the House and the Senate who agree with us that the death tax punishes a lifetime of hard work and I hope to see movement in both chambers on this legislation this year," he said.
Brady called the "death tax" the "wrong tax at the wrong time."
"After a family loses a loved one, why should Uncle Sam swoop in and take much of the nest egg they spent a lifetime building? Especially when it forces the survivors to take out loans or sell their land or business just to try to keep some of what they worked so hard to earn," he said.