Insurance agents are pleased that the House of Representatives is paying attention to the estate tax but want lawmakers to seize the opportunity to reform the tax rather than simply extend current provisions.
Yesterday, the U.S. House of Representatives passed H.R. 4154, which permanently sets the estate tax rate and exemption amount at this year’s levels. As present time, the estate tax has a rate of 45 percent with a $3.5 million exemption. The estate tax is scheduled to be repealed in 2010 and return in 2011 with a 55 percent rate and a $1 million exemption.
The Independent Insurance Agents and Brokers of America (the Big “I”) said family-owned businesses such as independent insurance agencies and farmers are “deeply impacted” by the estate tax.
Robert Rusbuldt, Big “I” president & CEO called H.R. 4154 “a good step in the right direction” but said “more is needed.”
Rusbuldt said agents support reform of the estate tax to encourage investment and growth in small business. This reform should come in the form of a decrease in the estate tax rate and/or increase in the exemption amount and should be indexed for inflation for the future, the group said.
Earlier this year, the Big “I” and a coalition of more than 40 business trade associations formed the Family Business Estate Tax Coalition. The group is supporting a bipartisan amendment sponsored by Senators Blanche Lincoln (D-Ark.) and Jon Kyl (R-Ariz.) that was passed by the Senate during consideration of the congressional budget. The Lincoln/Kyl amendment would reduce the top rate to 35 percent and increased the exemption to $5 million.
That amendment, however, was non-binding. The Big “I” said it hopes the Senate will adopt the Lincoln/Kyl amendment.
“The estate tax disproportionately impacts small and family-owned businesses that serve local communities and fuel our economy,” said Charles Symington, Big “I” senior vice president of government affairs. “Without real permanent relief, family-owned small businesses are unable to plan ahead and make important business decisions. Many of these businesses are asset-rich, yet lack liquidity to pay estate taxes when an owner passes away. There is evidence that the estate tax hinders the perpetuation of family-owned businesses because survivors are often forced to sell the business to pay their tax.”
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