Last week, House Republicans released a comprehensive tax reform blueprint that includes full repeal of federal estate and gift taxes. House Ways and Means Committee Chairman Kevin Brady (R-TX) outlined the plan in a Wall Street Journal op-ed.
Key tenets of the House GOP tax plan that reflect longstanding priorities of the Family Business Coalition (FBC) – of which NFDA is a member – include:
- Federal estate and gift tax repeal. “By repealing the death tax, the Blueprint eliminates this potentially devastating tax that is applied when the owner of a family business dies. This will make it easier for job creators to stay in business and continue to contribute to their communities. At the same time, America’s entrepreneurs will no longer have to divert scarce resources from their businesses to hire expensive accountants and lawyers to develop estate plans to ensure their companies survive to the next generation.”
- Lowers rates on small businesses by separating business income from wages. “Today, more than 50 percent of jobs are created by so-called “pass-through” businesses – sole proprietorships, partnerships, limited liability companies, and S corporations. They are taxed at the individual tax rates that can be as high as 44.6 percent. For the first time, this Blueprint will create a separate, low tax rate of 25 percent for business income earned by these Main Street job creators. This represents the lowest tax rate on small business income since before World War II. As a result, small businesses will be able to keep more of their hard-earned profits and use those funds to grow their companies, raise wages, hire new workers, and invest in their communities.”
- Full business expensing. “When American job creators buy new equipment, they face complex depreciation rules, which allow the business to write off the purchase over a sometimes long – and often-arbitrary – period of time. Too often, these rules require businesses to hire accountants to determine how each asset must be treated for tax purposes – funds they can’t invest in growing their business or increasing worker salaries. The Blueprint allows job creators to immediately write off the full cost of new equipment in the first year, freeing up tax dollars to grow their business, create jobs, and raise wages.”
- Lower capital gains rates to encourage investment. “The Blueprint allows families and individuals to deduct a higher percentage of the dividends, capital gains and interest received from investments in stocks, mutual funds or other investments. This will allow them to keep more of their investment earnings, which can be reinvested to keep growing their savings.”
The passage of Brady’s Death Tax Repeal Act in the House last April, inclusion of death tax repeal in tax reform plans, and growing number of Senate cosponsors on Senator John Thune’s (R-SD) S. 860 shows that death tax repeal remains a top-tier issue in ongoing tax reform discussions.
A total of 113 organizations signed the FBC’s most recent letter to House Majority Leader Mitch McConnell supporting a Senate vote on the House passed legislation. FBC also sent a letter of support for the new tax reform plan to Speaker Paul Ryan (R-WI) and House leadership.
Earlier this week Congresswoman Martha McSally (R-AZ) sent a letter signed by 109 House members to the Committee on Ways and Means urging the committee to include death tax repeal in tax reform.