Treasury Department Proposed Changes That Would Be Costly For Family Businesses
Earlier this year, the Treasury Department announced a sweeping proposal to alter the estate tax that drew opposition from many in the business community. The Hill reported that in response to the Treasury’s proposal, “thousands of companies and organizations representing family-owned business” wrote a letter to Treasury Secretary Jack Lew and House and Senate leaders asking the Treasury Department “to withdraw” the proposed rules, which the letter characterized as “one of the most sweeping changes to estate tax policies in the last 25 years.” The letter warned that the proposed rules would impose “significant new tax costs on family-owned businesses, diverting capital from business investment, costing jobs and threatening the ability of families to pass businesses on to the next generation of owners.” In additional coverage, The Hill also noted that this opposition to the proposal from “business groups, small-business owners and family farmers” came in the form of “formal comments submitted to the Treasury Department and IRS.” The Hill said that as of the start of the month, Treasury and the IRS “had received more than 9,000” comments on the rules, including from “individuals who oppose the estate tax” as well as “a number of comments from business groups and owners of small businesses and farms.” The article reported that stakeholders “argue that it would make it harder for family businesses and farms to be passed on to future generations.” For example, a recent survey conducted by the National Association of Manufacturing “of family-owned manufacturers found that ‘over half of respondents indicated that their business was likely to spend over $50,000 on additional estate and succession planning due to this regulation in the coming months.’”
What This Means For Small Businesses
Many small business owners would like to leave a legacy. Alterations to the estate tax could mean that the businesses they’ve invested their lives in would be more heavily taxed by the government, leaving future generations less able to effectively carry on established businesses.
Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.