Estate Tax Repeal Movement Intensifying

Questions surrounding the future of the estate tax seem to be a constant in recent years. On June 19^th, Senator John Thune of South Dakota and Representative Kevin Brady of Texas resurrected the issues surrounding the estate tax by expressing their hope that a repeal of the estate tax would be included in a broader tax reform effort.  Thune and Brady then went on to introduce the Death Tax Repeal Act of 2013 (S. 1183), which would eliminate the estate tax. [See "GOP Taxwriters Push for Estate Tax Repeal as Part of Tax Reform," taxanalysts® Tax Notes Today, June 19, 2013 and "S. 1183 Would Repeal Estate Tax," taxanalysts® Tax Notes Today, June 19, 2013.]

GOP leaders and other conservative groups have lent their support for the elimination of the estate tax. For example, Senator Orrin Hatch of Utah said that the death of the estate tax would mean protection for small farms and businesses. Americans for Tax Reform support the repeal because the estate tax is unfair, unpopular, increases unemployment, and immoral. [See "Americans for Tax Reform Urges Support for Estate Tax Repeal," taxanalysts® Tax Notes Today, June 19, 2013.]  The American Farm Bureau Federation supported the Death Tax Repeal Act of 2013 by stating it "believes that permanent repeal is still the best solution to protect all farms and ranches." [See "Farmers Organization Supports Estate Tax Repeal," taxanalysts® Tax Notes Today, June 19, 2013.] While some of the reasons for supporting the estate tax are better than others, it seems like supporters of a permanent repeal still face an uphill battle if they hope to find success.

Democratic leaders seem unwilling to come out in full support of the repeal as Senator Thune has yet to find a Democratic cosponsor in the Senate for the Death Tax Repeal Act. Further, the White House's fiscal 2014 budget proposes a return to the 2009 estate tax which includes a 45 percent tax rate with a $ 3.5 million exemption not indexed to inflation. Although these changes would likely be delayed until 2017, this budget proposal is in direct contradiction to estate tax repeal.

As the future of the estate tax is once again called into question, practitioners will continue as usual - providing estate planning services for clients based on the currently enacted estate tax while keeping their eye on Congress in an effort to plan for the future.

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