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April 15, 2005

The Small Business Counsel Of America Is Against The Estate Tax Repeal

Citing the loss of step-up basis upon death, The Small Business Counsel of America (SBCA) believes that the bill repealing the estate tax beyond 2010 is a bad thing for many small businesses. The SBCA is calling for immediate tax reform to aid small business owners.

Specifically, the SBCA is calling for the estate tax exemption to be increased immediately to $3.5 million, with gradual increases until it reaches $5 million. It is also calling for preservation of the step-up basis rules and an increase in the gift tax exemption in order to match the estate tax exemption. It also proposes an exemption for retirement plan assets of up to one million dollars if assets are going to a spouse and $500,000 if the assets are going to others. Finally, SBCA is calling for the top estate tax rate to be reduced if an interest in a closely held or small business is subject to the tax.

The death tax debate should heat up as the Bill nears Senate vote. It will be interesting to see where the small business community stands since it is pitting the estate tax against the step-up basis rules. Theoretically, the dividing line will be between the "have's" and the "have-not's" in the small business community. This is because a cost benefit analysis would make the step-up basis rules more appealing to "small" small businesses since they are probably too small to be subject to estate taxes whereas "large" small businesses would be more likely to gain from the estate tax repeal since the capital gains tax rate is less than the estate tax rates.

Posted by Nick Infusino at 11:58 AM in Small Businesses | Permalink


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