Bill Takes Aim at Backdoor Death Tax Hike

The Honorable Marco Rubio
United States Senate
284 Russell Senate Office Building
Washington, D.C.  20510
The Honorable Warren Davidson
United States House of Representatives
1011 Longworth House Office Building
Washington, D.C. 20515

Dear Senator Rubio and Representative Davidson:

On behalf of the members of National Taxpayers Union (NTU), I write in support of the “Protect Family Farms and Businesses Act,” S.3436 and H.R. 6100 in the Senate and House respectively. This legislation would vacate the Treasury’s recently issued regulatory proposal, IRS-REG-163113-02, which would make significant changes to Section 2704(b) of the U.S. Tax Code and the manner in which valuation discounts are applied to family business shares when calculating death tax liability. This proposed rule would expose heirs to increased costs that could be far above the true value of their share, compounding the financial and economic harm already imposed by the death tax.

The proposed changes to Section 2704, and the three year “look back,” would exacerbate the uncertainty created by the death tax. Already, family business owners expend a large amount of time and financial resources planning for the end-of-life transition of property in order to avoid unnecessary disruption and costs to both family members and employees. Further complicating these scenarios would necessitate an increased diversion of these resources to tax compliance, leaving fewer funds for the capital and personnel investments that benefit our broader economy. Those businesses and individuals left intact by the Section 2704 changes would be on shakier financial ground and less able to absorb or adapt to other losses.

Economic experts have repeatedly confirmed that the death tax is a jobs killer; slicing and dicing businesses slows business activity, destroys jobs, and suppresses wages. It’s wrong to use the Tax Code to tear apart what entrepreneurs and families have jointly built over decades of hard work and sacrifice. This hurts individual prosperity, can damage familial bonds, complicates grief, and kills jobs. It’s important to stop this “back door” death tax hike and prevent further harm from this misguided policy.

NTU is pleased to endorse S. 3436/H.R. 6100 and we urge all Members of Congress to cosponsor this legislation.

Nan Swift
Federal Affairs Manager