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  • Congress Considers Steep Death Tax Increase

    Leaders in the House of Representatives recently discussed the possibility of extending the death tax at its current rate and exemption levels for one year through 2010. If this proposal becomes law it would be a massive tax hike.

    Under current law, the death tax has a top rate of 45 percent and an exemption of $3.5 million ($7 million for couples) this year. But on January 1, 2010 it expires. It only stays expired for one year, however, as it springs back to life in 2011 with a top rate of 55 percent and an exemption of only $1 million ($2 million for couples).

    With this impending one-year hiatus looming, members of both the House and Senate were coalescing around an agreement to extend the death tax permanently at a 35 percent top rate and a $3.5 million exemption. Senators Kly (R-Arizona) and Lincoln (D-Arkansas) were successful in including a provision for such an extension in the Senate’s 2010 budget resolution. Representatives Berkley (D-Nevada) and Brady (R-Texas) offered similar legislation in the House.

    The Kly/Lincoln and Berkley/Brady plans would have increased the death tax for 2010 – any extension would be a tax hike since the death tax raises no revenue in 2010 under current law– but would have lowered the death tax in succeeding years.

    This new agreement struck by some in the House would increase the death tax above the level proposed by Kyl/Lincoln and Berkley/Brady in 2010 and beyond, and opens the door to returning the tax after 2010 to its previous jobs destroying 55 percent rate and $1 million exemption.

    Heritage research has shown that the death tax is a severe hindrance to the economy because it:

    • discourages savings and investment;
    • undermines job creation;
    • suppresses productivity and wage growth;
    • contradicts the central promise of American life: wealth creation;
    • hurts those who have their savings tied up in land; and
    • hurts businesses owned by women and African-Americans.

    Its no wonder the latest research shows full repeal of the death tax would create 1.5 million jobs.

    Congress should turn back this attempt to hike taxes after considering the devastating impact the death tax has on family-owned businesses. As recently released videos from the Heritage Foundation show, the death tax hammers these small businesses and destroys jobs and weakens communities in the process.

    The economy cannot afford an increase in the Death Tax. And while the Kyl/Lincoln and Berkley/Brady framework would be an improvement over the newest proposal, the economy really needs the boost full repeal of this harmful tax would give. It is time for Congress to do the right thing and kill the Death Tax once and for all.

    Posted in Economics [slideshow_deploy]

    8 Responses to Congress Considers Steep Death Tax Increase

    1. Adam Nicholson, DC says:

      great research and great post, Curtis. A temporary extension of the estate tax is nothing less than a tax hike, and a particularly bad one at that.

      For more videos of the impact of the estate tax on family businesses, please visit: http://www.estatetaxtruth.org.

      No Taxation without Respiration!

    2. John B. San Diego CA says:

      Greetings Heritage Foundation, may I preface my statements with a declaration? Realizing comment is always a privilege not a right on this blog, I may press the extension of privilege, however not intentionally only through passion and the hopefulness of a free America will I risk this?

      What strikes me as apparent is, Liberal Leadership in Congress and the current Administration is not satisfied with cradle to grave dictatorial authority! No, as leadership they must have total control, i.e. from the point of conception…. until the point after being laid to rest. What is prescribed as freedom in the interim period? Wherein we all exist as common men and women…/our human rights during existence here on earth? I submit to all rational mindset that we are being afforded precious little in the form of "LIFE, LIBERTY, and the PURSUIT of HAPPINESS here on earth!" As each and every day passes leadership in the majority and the executive is planning and plotting the very end of "OUR CONSTITUTIONAL RIGHTS!" Why you ask, for one world government I say, the end of sovereignty, collapse of our currency and a promise of even more power for those in charge!

      STEP BY STEP they march on— robbing us—wake up America!

      I pray I am wrong.

      JB ####

    3. Doug Bissonette, Bin says:


    4. Bobbie Jay says:

      Where's the empathy? How immoral.

      For those that vote this in, will be haunted for the rest of their days.

    5. Patricia, dunkirk MD says:

      They want our mind, body and possessions. God help the people

    6. michael f mccarthy says:

      It's a good time to die… if you own a fram, business or valuable stock. The "death tax" is scheduled to expire January 1, 2010 and spring back to "life" in 2011 with a top rate of 55% for anyone having wealth valued at more than $1 million. You have one year in which to die before your heirs have to sell half the farm, half your business equipment or half your stock portfolio to pay the estate tax. Even foreign investors will have to pay this tax. In anticipation of these taxes we can expect older farmers, businessmen and investors to start selling off their assets. Due to Obama-crat tax policies land values will decline as land sales increase; unemployment will increase with more business closures; and, stock values will decline in proportion to the number of people "retiring" from the market. Where is this analysis wrong?

    7. Pingback: Video: Estate Tax a Killer for Family-owned Businesses – Part 2 | Conservative Principles Now

    8. Ron Andersen, Lincol says:

      How can help the many members of our families if the government takes over half of your wealth. It has already happened to our family to the tune of 55% or 6.4 million dollars before the reform, everything had to sold to pay the tax, what was left was split 6 ways and now the government wants more. It's not our fault the government can't manage money. Why make us pay each time a family member dies. It's just not right. A million dollars is not what it was in the early 1900's. Today it is less than what you need to have financial security within your family. i.e Husband – wife – children – 2 sets of parents – 2 sets of grandparents and many grandchildren if you lucky. The 1 million dollar CAP is a joke concidering our deflated dollar today.

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