Today Representative Jodey Arrington (R-TX) introduced the Estate Tax Rate Reduction Act of 2020 (HR 5652) in the House of Representatives, the identical companion bill for the Rate Reduction Act legislation pending in the Senate (S. 176)!

The legislation would tie the estate tax rate to the capital gains tax rate, effectively halving the rate from 40% — the highest in the IRS Code – to 20%.

While ultimately, our goal is to repeal the estate tax fully; this effort does more than reducing the rate for those who may be impacted by it.

If enacted, this would also put us on better footing for full elimination since under budgeting rules, if Congress cuts a tax somewhere, they need to make up for that tax someplace else either with new taxes or cuts to other spending over ten years. Because the estate tax currently brings approximately $20 billion a year to the federal treasury, that means it would “cost” the federal government $200 billion to eliminate the tax. If it were to be halved, the ten-year number would also be split to a cost of $100 billion.

Now some of you might be thinking, the 116th Congress has been up and running for over a year, and the bill is just getting introduced? Sadly, the answer is yes. Unlike the senate wherein the previous Congress the rate reduction bill had been introduced, there was no rate reduction bill ever introduced prior to this one in the House. New ground is always harder to till!

And what made this even harder was opposition to it being introduced by groups for which the estate tax is effectively repealed by the new, higher exemption amount of $11.2 million per spouse. Their objections aren’t technically to the policy of reducing the rate for those still left to pay it, but more on keeping Congress focused on making the higher exemption rate permanent.

Toward that end, we also supported any legislation that was targeted at making the Trump tax cuts permanent, but also believe we need to fight this battle on multiple fronts. Our fight to eliminate the death tax has been caught up in all of the attacks against the successful – wealth taxes, higher capital gains taxes, higher rates in general, and on large estates – so we think broader push back is also necessary! We’re for making the current rates permanent, we’re for rate reduction, and we’re absolutely for full repeal.

To get this legislation introduced by a member of the Ways & Means Committee was our goal, and it meant we focused on that committee to get it done. We’ll now circle back with the other members on both sides of the aisle to invite them to co-sponsor the bill. From there, we’ll more broadly reach out to every member and educate them on this issue and seek their support on permanency, rate reduction, and repeal!

Family Enterprise USA is the organization that represents all family businesses on a national level in DC; it is not unique to any industry. Family Enterprise USA is different from other organizations because it represents and advocates for the families of family businesses and the issues, they face running their businesses every day. Our sole mission and purpose is to promote family businesses and their job growth in America. We also support the work of Family Business Centers across the country. We hope your family will choose to be a member of Family Enterprise USA.

FEUSA advocates for the families of family businesses and the issues they face every day in running their businesses across all industries.

Your support is vital as Congress works to change tax laws and regulations that effect all family businesses.