Senate Hearing on Death Tax Suggests Same Tax, Different Name

The Senate Finance Committee held a hearing on March 12, 2008 on the estate tax, as part of a series of hearings that Chairman Max Baucus (D-MT) promised to schedule last year regarding the elimination of the estate tax.  Unfortunately, the focus of the hearing was to replace the estate tax with an inheritance tax rather than repeal it.  The Forest Landowners Association, in alliance with the American Family Business Institute, is working closely with Congress on this issue. 

Estate Tax vs. Inheritance Tax:  The estate tax is placed on the estate of the person who dies. The inheritance tax is placed on the person who inherits the estate. The reality is that, regardless of who specifically is taxed, when an asset is passed on to an heir and there isn't liquid capital to pay the tax – then part or all of the asset must be sold to off to pay the tax.  Call it the estate tax or call it the inheritance tax, either way it will inhibit capital stability and family finances.

The Hearing:  In testimony before the Senate Committee, the panelists advocated the notion of an expanded death tax; i.e., all the witnesses were in favor of increasing "wealth transfer taxation." The points made by the testimonials were to advocate a substitution of an inheritance for the current estate tax.  Senator Jim Bunning (R-KY) and Senator Blanche Lincoln (D-AR), the 2007 Forest Landowners Association Forest Champion Award recipient, voiced objection over wealth redistribution and its affect on family-owned businesses. Unfortunately, their sentiment was in the minority and the issue remains unresolved.

Impact on Forest Landowners:  There is little chance of the inheritance tax proposal being enacted in this Congress.  It is very likely though, that some members of Congress will continue to block our efforts by using distractions, such as this hearing, to keep repeal or reform of the death tax from moving forward through Congress. The Forest Landowners Association, along with members and concerned citizens, will continue to show Congress that this tax is damaging to family-owned businesses and must be repealed

This article was contributed by FLA’s contract lobbyist, Frank Stewart.  For more information, contact Frank Stewart at FMS@Washington-Resource.com.