Thune sponsors bill to repeal ‘death tax’Saying a lifetime of hard work and thrift should not be punished at death, Sen. John Thune, R-S.D., introduced a bill Wednesday to permanently repeal the federal estate tax, known as the death tax by its many critics.
By: Denise Ross, The Daily Republic
Saying a lifetime of hard work and thrift should not be punished at death, Sen. John Thune, R-S.D., introduced a bill Wednesday to permanently repeal the federal estate tax, known as the death tax by its many critics.
"The death of a loved one should not be a taxable event," Thune said. "This tax penalizes farmers and entrepreneurs for a lifetime of hard work. The federal government has no place being in the business of forcing grieving families to pay a tax on their loved one’s life savings that has been built from income already taxed when originally earned."
Thune cites a study conducted by Douglas Holtz-Eakin, a former director of the non-partisan Congressional Budget Office. The study found that repealing the estate tax would create 1.5 million small business jobs and decrease the national unemployment rate by nearly 1 percent.
Thune also said he believes the estate tax places additional obstacles in the way of transferring a business, farm or ranch from one generation to the next.
“More than 70 percent of family businesses do not survive to the second generation, and 90 percent of family businesses do not survive to the third generation,” reads a press release issued by Thune’s office. “(This tax makes) planning and passing on farms and businesses to the next generation even more difficult.”
Thune said that, ideally, this issue would be part of a broader effort at comprehensive tax reform, expected to be taken up by Congress after this year’s election. However, current tax rates and exemptions are set to expire at the end of 2012, making action necessary this year, he said.
The current exemption on the first $5 million of wealth is set to revert to the 2001 limit of $1 million. In addition, the estate tax rate is set to rise to 55 percent rather than a top rate of 35 percent. Not changing that course would hit South Dakota’s agriculture community hard, Thune contends.
“If you have any land today, with farmland prices being what are, you are going to have a significant balance sheet. All that would be subject to a 55 percent tax rate when you die,” he said. “That would absolutely be very harmful to South Dakota’s farm and ranch economy.”
Thune believes that the additional economic activity and jobs created if his bill passed would more than make up for the $23 billion in tax revenues that would be lost.
“The amount raised by the death tax annually is less than 1 percent of federal revenues and amounts to about three days of federal spending,” he said. “The cost to comply with this tax exceeds the amount raised by it, according to most studies done. It’s a very inefficient tax.”