New York Estate Planning & Elder Law Blog
On March 3, a bipartisan bill was introduced in the House of Representatives in Washington D.C. that would take away the federal estate tax. The Death Tax Repeal Act, otherwise known as HR 1105, is the first bill of its kind in over ten years that has actually reached the point of a vote on the floor. The House Ways and Means Committee plans to vote next week on a bill to repeal the U.S. estate tax.
Key Points of Legislation
The main points in the Death Tax Repeal Act can be boiled down to three key areas: estate tax repeal, generation-skipping transfer tax repeal, and the modification of gift taxes. First, the bill eliminates the federal estate tax for “decedents dying on or after the date of the enactment of the Death Tax Repeal Act of 2015.” In addition, “with respect to the surviving spouse of a decedent dying before the date of the enactment of the Death Tax Repeal Act of 2015–[federal estate taxes] shall not apply to distributions made after the 10-year period beginning on such date, and . . . shall not apply on or after such date.”
In regards to generation-skipping transfer taxes, the bill would eliminate federal taxes on “the estates of decedents dying, and generation-skipping transfers, after the date of the enactment of this Act.” Finally, the bill also modifies gift taxes and the overall exemption limit on gifts. Under the bill, the gift tax would be calculated according to a new rate schedule, and the lifetime gift exemption for a single person would be $5,000,000 plus any inflation.
Subcommittee Hearing
On March 18, the Ways and Means Subcommittee on Select Revenue Measures held a hearing to examine the burden the estate tax places on family businesses and farms. One of the representatives that introduced the bill stated that “The Death Tax is still the number one reason family-owned farms and businesses in America aren’t passed down to the next generation . . . After a family loses a loved one, why should Uncle Sam swoop in and take much of the nest egg they spent a lifetime building? Especially when it forces the survivors to sell their land or business just to try to keep what they worked so hard to earn.”
The subcommittee hearing recognized that the federal estate tax hurts many businesses and farms. However, Democrats and Republicans differed slightly in their opinions about the measure. While Republicans want a complete revocation of the federal estate tax, Democratic leaders are leaning more towards carving out specific exemptions to the federal estate tax, such as for farms and family businesses. Since this meeting, the full Ways and Means Committee, run by Representative Paul Ryan, has stated that it intends to hold a vote on the bill in committee. If successful, HR 1105 could be sent up to an April House of Representatives floor vote for approval, making it the first House vote on stand-alone repeal legislation since 2005.