House Committee Approves Estate Tax Repeal

A bill approved Wednesday by the House Ways and Means Committee would repeal the 99-year-old U.S. estate tax. 

The legislation was backed on a 22-10 party-line vote and would benefit about 5,500 families who pay the tax each year plus thousands of others who organize their finances to avoid the 40 percent tax on their estates.  The caveat: it would deprive the U.S. government of $269 billion in revenue over a decade. 

Despite passing in the Ways and Means Committee, the measure will likely not become law under President Barack Obama, who would like to impose higher estate taxes.  Rather, the bill places a marker for business groups that have been pressing Congress to act and could possibly foreshadow what Republicans might do if they control both Congress and the White House in 2017. 

The bill, H.R. 1105, is sponsored by Texas Republican Kevin Brady and would levy a gift tax on transfers made during one’s lifetime.  The existing $5.43 million lifetime exemption would remain, and the rate would be reduced to 35 percent from 40 percent.  Under Brady’s bill, there would be no estate tax, but heirs would still owe capital gains taxes on the amount exceeding $20 million.

See Richard Rubin, Wealthiest Win as U.S. House Panel Advances Estate-Tax Repeal, Bloomberg Business, March 25, 2015.

Special thanks to Jim Hillhouse (Professional Legal Marketing) for bringing this article to my attention.