AEM Urges Permanent Repeal of Federal “Death Tax”

June 2, 2006 — The Association of Equipment Manufacturers (AEM), Milwaukee, recently encouraged the Senate to pass a permanent repeal of the estate tax. The association states that it supports repeal of the estate tax because of its adverse effect on small, family-owned companies. Unlike larger companies, AEM says many small-business owners have the entire value of their business in their estate. Permanent repeal would relieve these businesses of excessive planning costs, increase investment, and add jobs. Currently, AEM maintains that they must direct more funds to estate planning to minimize the impact of the estate tax — funds that could go toward increased capital investment. Jobs are also lost when a business must be liquidated to pay the tax.

 

The federal estate tax, also called the "death tax," was slowly phased out as part of the Economic Growth and Tax Relief Reconciliation Act of 2001. It is scheduled to be fully repealed in 2010. However, because of congressional budget rules that require permanent tax cuts to be offset with permanent spending cuts, the repeal law will expire in 2011, and the estate tax — with rates reaching 55 percent — will be reinstated.

 

President Bush has repeatedly called on Congress to repeal the death tax. On April 13, 2005, the House of Representatives passed H.R. 8 to make permanent the repeal. The Senate has yet to take up repeal legislation, but Senate Majority Leader Bill Frist (R-TN) has promised a vote in the near future.