Hulshof seeking estate tax repeal

Deficit worries complicate push

Author: Matt Stearns

Published: February 18, 2005

If you're worth a few million dollars and want to leave it to your heirs unencumbered, 2010 looks like a pretty good year to die.

That's the year the estate tax, which began to be gradually phased out in 2001, ceases to exist.

But don't dally - the tax is scheduled to kick back in again in 2011 unless Congress takes action.

Its potential return is opposed by President Bush, who campaigned for re-election on the promise to make his tax cuts permanent. The push to once and for all repeal the estate tax - the death tax, to its detractors - began Thursday as Rep. Kenny Hulshof, a Missouri Republican, introduced legislation to do that.

?If we do nothing, then on January 1, 2011, the death tax springs from the grave like one of these bad horror flicks,? Hulshof said, noting that, having recently lost both parents, he was waiting to find out whether his family's 514-acre farm in southeast Missouri would be worth enough to be subject to the tax. ?We have to finish the job. ? The death of a family member should not be a taxable event.?

His push won't be easy, coming as it does in tough fiscal times, with the bipartisan Joint Committee on Taxation estimating that a permanent repeal would cost $271 billion over 10 years and opponents pointing out that the vast majority of estate tax revenue comes from the very rich.

Hulshof made his comments at a news conference attended by small-business owners - including the owners of a Columbia, Mo., lumberyard - and farmers. Estate tax opponents often cite such groups as unfairly hit by the tax and say many families must sell their businesses to pay the tax because the assets that give them wealth are tied up in land and inventory, not cash.

Brad Eiffert, co-owner of the Boone County Lumber Co., said family farms and small businesses - and the overall economy - would be helped if, instead of paying for estate planning costs such as insurance, they could put those resources into their businesses.

Hulshof cited a study by the conservative Heritage Foundation, which found that estate tax planning costs 170,000 to 250,000 jobs annually.

?At best, (the estate tax) is an expensive burden for small businesses,? Eiffert said. ?At worst, it's the end of the line for small businesses that don't do the planning.?

But such small operations and family farms account for a minuscule part of the estate tax, according to the nonpartisan Tax Policy Center.

In 2004, the center estimated that only 330 smaller holdings were subject to the estate tax, about 2 percent of the total number deemed taxable. They paid $95 million out of the estimated $17.6 billion in estate tax revenues the government collected. About 99 percent of the tax is paid by the richest 5 percent of Americans, according to the center.

One way to protect family farms and small businesses would be to raise the threshold at which an estate would be taxed or to give such estates special deductions, said Len Burman, the center's co-director.

The National Federation of Independent Businesses, a lobby that helped organize Hulshof's news conference, rejected that suggestion.

?Any kind of compromise plan is strictly off the table,? said Dena Battle, a lobbyist for the federation, saying that as long as the tax exists, small businesses would have to spend resources planning for it.

Hulshof's bill, a top priority of House leaders, has 106 co-sponsors. Similar legislation passed the House last year by a wide margin but did not make it through the Senate.