Life’s only certainties are death and taxes. Unfortunately, the government won’t even let someone die without taxing them. The current death tax rate is almost 50 percent. That means within nine months of death, Uncle Sam gets 47 percent of the value of everything you own — including cars, furniture, personal belongings, homes, investments, pension plans, 401(k)s and even your business, if you own one.
The death tax hurts the economy by devastating family businesses such as farms and construction companies. Since most people don’t have cash to pay a huge estate tax bill, families are often forced to sell or close successful businesses just to pay Uncle Sam. This hurts our economy and leads to job losses.
Losing a loved one is difficult enough. The financial worry caused by the death tax makes such a loss even more unbearable, especially for gay and lesbian couples. Under current law, married couples are allowed a “marital deduction” that shields assets from taxation when one spouse dies. Gay couples are prevented from getting the same benefit As a result, they are subject to the death tax twice. A partner’s assets get taxed once and those same assets get taxed again at the death of the second partner. Does this make sense? No, because the estate tax makes no sense, and Congress has a chance to fix it this year.
The public overwhelmingly supports a repeal of the estate tax. That’s why Republican and Democratic political leaders want to reform this tax. In fact, Congress has spent the last decade debating the issue. The 2001 tax bill included some estate tax reform, but it actually created even more confusion. That’s because the estate tax will be phased out in 2010, but only for one year. Without congressional action, the death tax will come back to life in 2011. Uncertainty about this issue makes estate planning more difficult than ever. Families need certainty in planning for the future of their businesses.
Both parties should sit down in good faith and work out a solution that helps families, businesses and workers. Congress should stop using the future of family businesses as an election issue or political tool. It’s time to pass permanent repeal or permanent reduction of the estate tax! It’s a matter of fairness. Why penalize those who work hard, create jobs, take risks, achieve success and pay substantial taxes during their lifetime with a 47 percent tax at death? It’s time to bury the death tax once and for all.
Patrick Guerriero is president of the Log Cabin Republicans.
