WASHINGTON -- The U.S. House of Representatives today passed a bill to repeal the federal tax that applies a 40 percent tax rate to estates worth at least $5.43 million.
The bill, called the Death Tax Repeal Act of 2015, was passed with 240 votes in favor and 179 voting against the measure. Sen. John Thune, R-S.D., has introduced a companion bill in the Senate, which was referred to the Senate Committee on Finance on March 25.
The estate tax was set at 40 percent on estates worth $5 million or more in 2013 as part of the set of so-called fiscal cliff legislation. With many dealerships being family-owned, the tax has long been unpopular with dealers, whose trade organizations have lobbied for years to curtail the tax’s impact on their members.
Dealers say the tax unfairly penalizes their family members, who often are faced with the prospect of selling their dealership or its assets to satisfy the estate tax bill if a dealer family member dies unexpectedly. Estate planning also gobbles up resources that could be better spent on their businesses.
Jared Allen, a spokesman for the National Automobile Dealers Association, says that most dealerships are family owned and many are run by second- or third-generation family members.
“These businesses shouldn't have to choose between closing, selling or incurring substantial debt just to survive the unanticipated loss of a key family member,” Allen said in a statement.
The American International Automobile Dealerships Association, which represents dealers of foreign auto brands, also praised the bill’s passage, saying in a statement that “family-owned businesses like dealerships are often land rich but cash poor, forcing heirs to sell off parts or all of their family’s business in order to pay the IRS.”
If signed into law, repealing the tax would reduce federal tax revenue by about $270 billion over the next decade, according to the nonpartisan Congressional Budget Office.
Few people are subject to the estate tax. According to the joint House-Senate committee’s report, roughly 5,400 U.S. households are estimated to be subject to the estate tax each year between now and 2019, accounting for roughly 0.2 percent of U.S. deaths annually. That’s down from more than 6 percent in the mid-1970s, when the number of those affected by the estate tax was at its peak, according to the Joint Committee.
Passing the Senate’s version of the bill would send the bill to President Barack Obama’s desk. White House officials voiced strong criticism of the repeal measure earlier this week, calling it a giveaway to the wealthiest Americans, The Hill reported on Monday.