Policy and Taxation Group submitted this letter for Ways and Means Tax Policy Subcommittee Hearing held on Wednesday 3/14.
The Honorable Vern Buchanan
U.S. Congressman, Sixteenth District of Florida
Chairman, House Ways and Means Tax Policy Subcommittee
1102 Longworth House Office Building
Washington, DC 20515
Dear Chairman Buchanan,
I write to you on behalf of the Policy and Taxation Group, which is an organization comprised of family-held businesses from throughout the country that are dedicated to reform of the estate tax. As the House Ways and Means Tax Policy Subcommittee examines “tax extenders” and the policy justifications underlying these temporary provisions, we want to ensure that the Subcommittee does not forget another important set of provisions that are also temporary: all of the individual tax policies included in tax reform – especially the doubling of the estate tax exemption.
While we are appreciative that tax reform included a doubling of the estate tax exemption, we believe that this should be a permanent change – not one which expires at the end of 2025. As Chairman Brady mentioned in announcing this hearing, tax-writers are taking “an important step in delivering the certainty and simplicity that Americans need in our nation’s new tax code.” However, if the goal is to achieve certainty, it is critical that Congress examines all of the temporary tax provisions in our tax Code and “prioritize permanence in policies that will benefit our economy for the long term.” While we believe that eliminating the estate tax is ultimately the best approach, we also believe that permanently doubling the exemption is good policy that will help achieve the Subcommittee’s goals.
That said, to maximize the benefits that come with reforming the estate tax, we believe that more than just a doubling of the exemption is needed. For example, based on the 2016 Internal Revenue Service estate tax tables, 88-percent of those who filed an estate tax return fall within the current exemption; however, of those who actually paid the tax, 66-percent remain subject to the tax – despite the increased exemption. This means that many of the family-held businesses that employ millions of Americans will be at risk when their estate tax bills come due – as will the jobs that they provide.
While we understand that Congress faced political and logistical constraints that prevented more expansive reforms of the estate tax last year, we urge you to use this as an opportunity to take bold action that will protect family-held business, spur additional job creation, and help the economy continue to grow. One idea that will help all family-held businesses subject to the estate tax: reduce the rate – which is arbitrarily the highest rate in the tax Code – to the capital gains tax rate, while maintaining step-up in basis.
In addition to a reduction in the estate tax rate, there are various other policy changes that could be implemented to protect family-held businesses from the unfair and disastrous consequences of the estate tax. As the Subcommittee continues to examine such policies in a post-tax reform world, we stand ready to serve as a resource to you, your fellow Committee members, and staff and are happy to provide additional information or answer any questions that you may have.
Thank you for your consideration of these important tax policies and your continued efforts to improve our nation’s tax Code.
Founder, Policy and Taxation Group