Despite majorities in favor of repeal, Congress was unable to overcome a presidential veto repealing Federal Estate Tax legislation during the 106th Congress.

Due to the current economic circumstance and a Bush Administration, momentum is building for reducing taxes. At first one might think that this is great news for repealing the estate tax, but after a closer examination this maybe yet another obstacle. The problem is that many believe repealing the estate tax does not qualify as an economic stimulus, a vital selling point for any tax proposals at this time.

ISSUE

In an effort to avoid liquidating the business, an enormous amount of time and energy is wasted in estate tax planning. Family-owned firms spend a lot of time running around in circles trying to prevent an estate tax catastrophe. For those that fail to make contingency plans, the odds are the business will not survive past the first generation as survivors are forced to liquidate the business.

To spur economic and job growth and to encourage entrepreneurship and savings, the outdated estate tax should be eliminated.

LEGISLATION

House Republicans have introduced a bill similar to the one considered in the last Congress. It will “phase-out” the estate tax rates by 5 percent each year for a duration of 10 years. In the 10th year, the estate tax will be eliminated.

OUTLOOK

Just a few years ago, even the most zealous supporters of eliminating the estate tax probably would not believe how far this issue has moved. In the last two years alone, great strides have been made in discrediting the argument that eliminating the estate tax is “a give-away for only the rich.”

The key to providing any relief will be to convince 10 or more Democrats in the Senate to go along with any initiative.