CED

February 2014

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February 2014 | Construction Equipment Distribution | www.cedmag.com | 61 View from the Hill Time to Bury the Death Tax for Good The Family Business Coalition, with AED's help, seeks to hold Congressional feet to the fire and bring repeal legislation to a vote. Last year was full of more congressional rhetoric and inaction to fix the federal estate tax. The Family Business Coalition, of which AED is a key member, significantly increased support for full repeal and helped to push the debate toward a more reasonable policy on the estate tax (also known as the death tax). This levy is having a crippling effect on family businesses; scrap- ping the death tax could create nearly one million new small-business jobs. Additionally, the Joint Economic Committee found the tax has eliminated $1.1 trillion in capital stock, the money used to create and expand businesses. Repeal would add $119 billion to gross domestic product and $79 billion to workers' income. Getting rid of it makes sense both fiscally and morally, and surveys have found 70 to 80 percent of American voters agree that the death tax should be permanently placed six feet under. Full repeal of the federal estate tax is not only achievable but is also the only acceptable outcome in this fight. The United States has instituted an estate tax four times to raise funds for wars or conflicts and three times Congress repealed the tax shortly after hostilities ended. Most recently, Congress brought back the tax to pay for the build-up to World War I. After the war ended, the tax remained, and for nearly 100 years, the death tax has been killing America's family busi- nesses and restricting the growth of our economy. In 2001, the first step toward completely eliminating the death tax was taken with passage of the Bush tax cuts. Over the last 12 years, we have beaten down the death tax signi- ficantly – the exemption has increased from $675,000 to $5.25 million and the rate has been reduced from 55 to 40 percent. The most signifi- cant recent victory came when the tax was repealed temporarily in 2010. Unfortunately, repeal was not made permanent before the tax cuts expired and the estate tax returned with a $5 million exemption, indexed for inflation, and a 35 percent rate. Shortly after, it was raised to 40 percent and made permanent as part of an agreement to avoid the "fiscal cliff." Even though the current estate tax is historically less burdensome, it is still destroying family-owned busi- nesses that are "asset rich" but "cash poor" and lack the finances on hand to pay a 40 percent levy. The death tax unfairly punishes every virtue of achieving the American Dream: saving, frugality, investing in the future, and building up a business to pass to the next generation. At the beginning of 2013, family businesses were forced to suffer an increase in the death tax with a 40 percent top rate and $5.25 million exemption, but the levy stayed in the spotlight as 80 senators voted to "repeal or reduce" it in a fiscally respon- sible way. Later, Rep. Kevin Brady (R-Texas) and Sen. John Thune (R-S.D.) introduced companion legislation in the House and Senate to permanently repeal the tax. The House bill gained more than 175 bipartisan co-sponsors, while the Senate bill attracted nearly 40. These actions showed great support for the issue and we plan further action in 2014. With the upcoming congres- sional elections, the Family Business Coalition will continue its past efforts by encouraging candidates for federal office to sign the Death Tax Repeal Pledge. In the 2012 elec- tions, more than 400 candidates for federal office signed the pledge and nearly 140 current members of Congress are signatories. The Family Business Coalition is urging Congress to bring death tax repeal legislation to the floor for a vote. The last time the House voted on death tax repeal legislation was in 2005, nearly nine years ago. Since that time, more than half of all House members have been replaced. It is unacceptable for 236 members to have never been put on the record on this issue. With an ever-changing political environment, we will work with Congress to design a tax code that does not include an unfair double- tax at death. As family businesses become more competitive in the global marketplace, the U.S. must remove barriers to the success of smaller companies. The Family Business Coalition looks forward to working with AED members to elimi- nate the estate tax once and for all. PALMER SCHOENING is chairman of the Family Business Coalition (FBC), a Washington, D.C.-based alliance of organi- zations and industry groups united for the common purpose of promoting tax policies that provide a pro-growth environment for America's family businesses. AED is repre- sented on the FBC's Advisory Board. BY PALMER SCHOENING

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