At a time when thousands of businesses across the United States are struggling to stay afloat, President Biden and members of the U.S. Senate are trying to shipwreck many of them with their latest tax proposal.
Instead of a lifeline for the businesses, they have dropped a 1000 pound boat anchor with the death tax. The STEP Act would dramatically impact the way capital gains would be assessed and taxed at the time of death. It is a "Double Death" tax scheme that would hurt family farms and family-owned businesses.
According to the findings of a recent study Regional Economic Models, Inc, the following alarming results would occur:
- Sustained annual job losses ranging from 500,000 to 1 million.
- 10-year losses in economic output and GDP of approximately $2 trillion and $1 trillion respectively with a
-$600 billion loss in private investment, and a
-$6 billion loss in R&D spending
- 10-year loss in personal income of about 1 trillion, which translates to $8,000-$10,000 per household
Stephen Moore, Committee to Unleash Prosperity's co-founder said, "This study shows that the Biden death tax scheme is an assault on the American tradition of family-owned and operated businesses being passed on from one family to the next."
Sadly, it appears some of our U.S. Senators are playing a shell game by attempting to play both sides. "Given the widespread opposition from small businesses and farmers, some members of Congress are claiming they will fight for exemptions, caps or whatever excuse they can come up with to claim they will protect family enterprises, said Moore." Simply put, their crafty argument is that they will support the monumental tax, but are indicating they will carve out or exempt others. Those smoke and mirrors are not worth buying.
What is alarming about possible exemptions and carve-outs is they simply fail. First of all, the IRS would be in charge of valuing the family business and farm. Secondly, they would disincentivize the entrepreneurial spirit of investing in a family business if they are taxed at 43.4 percent should they be highly successful.
In a nationwide survey conducted by Saving America's Family Enterprises (SAFE), the results show the voters believe the wealthiest families will find loopholes to avoid the STEP Act, while the middle class and small businesses face staggering new tax bills. The results of the survey findings are eye-opening with 83 percent of the voters believing the STEP Act will destroy family businesses and jobs.
As it stands, there are members in the U.S. Senate who are trying to help. They are supporting an amendment proposed by Senator John Thune to preserve the family-owned businesses and farms allowing owners to pass them on to future family generations without facing massive double death tax consequences. One Hale County, Alabama catfish and cattle farmer, Townsend Kyser said, "Preserving stepped-up basis is critical to my family farm and farms across the Black Belt. I appreciate Congresswoman Sewell's work and encourage her and other Members of Congress to continue their effort."
AmSA has plenty of concerns and encourages our Members of Congress to oppose this aggressive double death tax STEP Act.