NFIB Supports Permanent Relief, Continues Work for Full Repeal of Burdensome Tax
In June 2006, the Senate failed to pass legislation to permanently repeal the death tax. H.R. 8, the Death Tax Repeal Permanency Act, received 57 votes but fell short of the 60 votes necessary to override a filibuster. This bill has passed the House four times since enactment of the 2001 tax cut and has the support of the president.
The Economic Growth and Tax Relief Reconciliation Act of 2001 reduces death-tax rates and increases the exemption every year until the tax is repealed entirely during 2010. But the death tax returns to its full 55 percent in 2011. Until the death tax is permanently repealed, it will continue to hurt small businesses. NFIB is committed to fully repealing the death tax.
Due to the tough political and economic climate in 2006, NFIB supported compromise legislation for permanent relief from the death tax, as an alternative to permanent repeal. NFIB supported H.R. 5638, the Permanent Estate Tax Relief Act of 2006, which was a compromise passed by the House. This bill included the following measures to protect small businesses:
- Estates below $5 million in value continue to be exempt while estates between $5 million and $25 million are taxed at current capital gains rate (15 percent); estates above $25 million are taxed at twice the current capital gains rate (30 percent)
- $5 million exemption level is adjusted for inflation
- Any unused exemption can be passed to the surviving spouse
- Full step-up in basis remains
Any future compromises will be reviewed as necessary to determine if they provide adequte relief for small businesses. NFIB continues to support full repeal of the death tax as the ultimate goal.
