A story originally reported in Bloomberg reports that a House Republican is planning to reintroduce a bill that would allow taxpayers to make annual payments, rather than face the estate tax at death in the event that estate tax repeal isn’t part of a tax reform plan.
Representative Andy Harris (R-Md.) has again proposed the American Solution for Simplifying the Estate Tax (ASSET) Act. Introduced in previous Congresses, the act would enable taxpayers to pay a percentage of their modified adjusted gross income annually for a certain number of years to avoid estate taxes at death. Harris introduced versions of the ASSET Act in 2014 and 2015.
Bloomberg’s article, “Maryland Rep Has Backup Estate Plan, If Tax Reform Fizzles,” says that if enough Republicans want the tax reform to be revenue-neutral, they’ll need to find significant revenue increases to offset President Trump’s proposed tax cuts.
Trump proposed a repeal of the estate tax during his campaign. It is also included in his tax plan. In addition, it’s in the House GOP’s tax reform framework.
In the 2015 version of Harris’ bill, taxpayers could elect to make annual payments of 1% of their modified adjusted gross income for a minimum seven-year period, in lieu of existing estate and generation-skipping transfer taxes. However, the Joint Committee on Taxation said that the 2015 bill would cost the government money. Thus, the new legislation will include changes to make it revenue-neutral. Harris commented that he’s considering increasing either the annual payment amount or the seven-year payment window.
The American Farm Bureau Federation has yet to express a position on the ASSET Act, but it supports the full repeal of the estate tax. The Federation said it supports increasing the exemption and indexing it for inflation, until a repeal is passed. The 2015 ASSET Act had no increase in the exemption amount. In addition, the group wants to see “basis step-up” in all scenarios. This allows a person who holds onto his or her assets until death, to get a step-up in the basis of those assets to fair market value. This reduces the amount of capital gains tax that heirs are required to pay on the inherited property, if it’s sold.
Reference: Bloomberg (May 8, 2017) “Maryland Rep Has Backup Estate Plan If Tax Reform Fizzles”
For assistance with planning for estate taxes, contact our office at 801-438-7120 for a free consultation.