In his final months of office, President Obama is set to unilaterally increase the scope of the Death Tax. Rather than make this tax more burdensome and confusing, the administration should work with Congress to repeal the unpopular tax.
Earlier this month, the Treasury Department announced a new rule affecting section 2704 of the tax code. The rule limits the use of two valuation discounts that families can take when assessing their Death Tax liability – a lack of control discount and a lack of marketability discount.
A lack of control discount can be claimed when a family holds a minority ownership stake in an asset, resulting in the asset holding less value on the open market. A lack of marketability discount applies when an asset held by the family cannot easily be liquidated because of market barriers.
The proposed Treasury rules make it much more difficult for families to claim these two provisions. As a result, the rule would increase the Death Tax for many families.
The rule has drawn opposition from lawmakers, led by Congressman Warren Davidson (R-Ohio) who recently introduced the “Protect Family Farms and Businesses Act.” This legislation, which would block the unilateral stealth Death Tax increase is a good, conservative bill and should be supported and co-sponsored by all Members of Congress.
The rule has also drawn opposition from a broad coalition of 119 business and free market groups including ATR that yesterday sent a letter to Treasury Secretary Jacob Lew in opposition to the proposed rule.
At a basic level, Americans know that the Death Tax is not fair. It is a tax you pay on savings you have already paid taxes on at least once, and potentially more than once. Those who are hit hardest generally are first and second generation small business owners, because the truly wealthy can avoid the tax through an army of accountants, attorneys, and charitable planners.
The Death Tax is also bad for jobs and the economy. According to the Tax Foundation, repealing the Death Tax would create 159,000 jobs and significantly increase wages, GDP, and capital investment.
The intense opposition to the Death Tax is unquestionable. In poll after, the Death Tax has consistently been opposed by nearly 70 percent of adults, registered voters, and likely voters. The House of Representatives even voted to repeal the Death Tax last year with a bipartisan vote of 240-179.
Rather than listen to the will of the people and support Death Tax repeal, the Obama Administration wants to make the Death Tax more complex and burdensome on American families.