Death Should Not Be A Taxable Event

The National Newspaper Association (NNA) is in support of efforts by Senators Blanche Lincoln and Jon Kyle to reform the federal estate tax. The two senators have proposed a compromise between those who wish to allow a full 55 percent estate tax to return in 2011 and those who argue for a full repeal of the “death tax.”

The senators wanted to attach the compromise to HR5297 in July that was sponsored by Rep. Barney Frank but the bill had already passed the House.

If Congress does not take action on the estate tax by the end of the year, as well as the other Bush tax cuts that were passed in 1992, all will be restored in 2011 to their formal levels.

The two senators’ proposals include the following provisions:

• 35 percent estate tax rate to be phased in, or gradually dropped, over ten years.

• An exemption amount of $5 million to be phased in, or gradually dropped, over ten years.

• A stepped up basis for inherited assets based on the original cost of the asset that is equal to the fair market value of the property at the time of the decedents death.

• An option for decedents who die in 2010 to elect to have no estate tax imposed and the assets acquired from the decedents would receive a modified carry-over basis.

The deal depends upon the success of the Senate Finance Committee in finding other ways to obtain revenue to pay for the tax loss. The Senate’s pay as you go rule requires tax cuts to be offset with savings in other areas of the federal budget.

NNA Government Relations Chairman Robert M. Williams, Jr. said the NNA board’s decision to support the compromise reflects its conclusion that incremental steps towards estate tax reform make sense in the present economic climate. “Family newspapers are like family farms in a sense. Paying taxes based on the total value of the business can force families to sell assets to pay the tax. NNA will continue to fight for a total exemption for family owned newspapers. While we do we appreciate the efforts of the senators,” Williams said. Robert and his wife, Cheryl, are owners of five Georgia newspapers.

In my opinion the estate tax is nothing but double taxation. Americans pay taxes on the money they earn over a lifetime while accumulating their estates and then when they pass away their families could have to pay up to 55 percent of the value of their estates in taxes if the old law goes back in full force. Remember that the “death taxes” apply to our homes, personal items, automobiles, life insurance, stocks, businesses, farms and any other assets we own. The tax generates about one percent of the federal budget.

May I urge you to be sure proper estate planning has been done. It can be complex, costly and time consuming, but we have no guarantees that the death tax will ever be repealed permanently. Those who do not have a plan that will pass family ownership to children, grandchildren or others could have family members being forced to sell property to pay the taxes.

There is nothing sacred about family ownership, but in farming, newspapers and other businesses we have seen some forced sales. Sometimes communities suffer when locally owned businesses are bought or run by large corporations.

The National Newspaper Association and the U.S. Chamber of Commerce have been at work for years in an effort to get the death tax repealed permanently. Death should not be a taxable event and the unfair death tax should be buried forever never to be allowed to rise from the grave.