Daily Local News business columnist Jan Colliton claims that the "Republican plan will move away from abolishing the Federal Estate Tax," and more interestingly, that "the future of the Federal Estate Tax will be the same whether a Democrat or a Republican occupies the White House." Neither of these claims is true, and I have the facts to tell you why.
First, Ms. Colliton's argument is based solely on the future of the arcane step-up in basis law - a problem that can be resolved without keeping the estate tax at its current rate, or for that matter, at any rate.
Second, regardless of the status of step-up in basis, many business owners and workers will be adversely affected if the Death Tax is maintained at its current rate. The Heritage Foundation found that the Death Tax results in the loss of 240,000 jobs annually. The Death Tax falls particularly hard on family business owners, who are often forced to "liquidate" some of their productive assets (i.e., business) in order to pay the tax. These family business owners are responsible for roughly half of all new jobs in the economy.
Third, her assertions fly in the face of political reality. The Death Tax is increasingly a leading issue in the 2008 election. Consider that Sen. John McCain has already changed his position - from voting against the 2001 law (H.R. 1836) that created the current "temporary repeal" of the Death Tax to voting for repeal in 2006 (H.R. 8). He currently supports a compromise rate of 15 percent, but could conceivably support repeal if elected. His running mate - Gov. Sarah Palin - and many of his advisors support full repeal.
More than 25 Senate candidates - including six incumbents - have signed the Death Tax repeal pledge - a project of the American Family Business Institute. These candidates include Sen. John Sununu of New Hampshire and State Treasurer John Kennedy of Louisiana (who is running against incumbent Mary Landrieu) - two of the most competitive races this year.
Unless you think that a host of candidates plan to break their pledge and risk the anger of American voters - especially those whose businesses and jobs are on the line - you better believe that the future of the estate tax is far from settled.
January 1, 2011 - Death Tax is re-instated to 55%
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