Senator John Thune, R.-S.D. has introduced the Death Tax Repeal Permanency Act S. 2242, which would permanently abolish the federal estate tax. The Senate bill is identical to H.R. 1259 introduced by House Representative Kevin Brady, R-Texas. The tax is currently set at 35% on estates over $5 million. However, beginning January 1, 2013, the rate will increase to 55% on estates over $1 million.
Many farm organizations including the National Cattlemen's Beef Association calls the estate tax an unnecessary tax on small businesses and farmers. Many of these farms are asset rich, however, cash poor in relation to the asset values. The imposition of an estate tax, in many cases, requires the farm to be sold and eliminate one more farm operation.
According to a study by Douglas Holtz-Eakin, the former director of the non-partisan Congressional Budget Office, the elimination of the death tax could create 1.5 million new jobs and decrease the unemployment rate by nearly 1%.
Remember, this is an election year and both of these bills were introduced by Republicans and it will be extremely difficult to pass any elimination of the death tax this year until after the election and that only assumes a major mandate from the voters.
Also, most states will still have their own estate tax laws and these taxes can be in excess of 10% of the net estate.