Editorial: Killing the Death Tax

Congress was poised last week to act on legislation that would help owners of family-owned trucking companies pass the fruits of a lifetime’s work on to their children without Uncle Sam taking a giant bite.

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As Transport Topics went to press, the Senate was debating how best to repeal the estate tax that must be paid when family-held businesses or property are transferred from one generation to the next. Since the tax is often triggered by the passing away of the estate’s owner, it has long held the morbid moniker, the “death tax,” and serves as additional proof that you can’t take it with you.

Current law requires that inheritances with a net value of $675,00 or greater must be taxed at rate beginning at 37% and extending all the way up to 55%. The tax often can be so onerous as to require the inheritors to sell the busines or property to pay the taxes. So much of trucking is made up of family businesses, sometime with three generations at work, that sessions on estate planning are widely attended at industry meetings. The Truckload Carriers Association even created a management panel in 1999 titled “Trucking: The Next Generation” to help make the handover of estates as painless as possible.

The House of Representatives voted overwhelmingly in June to phase out the estate tax over the next decade. Senate Democrats, including their ranking colleague on the Finance Committee, Sen. Daniel Patrick Moynihan (N.Y.), opposed the House-passed bill as being too expensive. The legislation would cost the government $104.5 billion in lost revenue as the top tax rate of 55% was gradually phased out.

Republicans fended off a proposal by Moynihan that would have eliminated the top rate but continued to require some level of taxation. It appeared likely that senators would reach agreement on compromise legislation before heading home for the August congressional recess. If estate tax reform is passed by the Senate, it must be reconciled with the House proposal, which seeks to eliminate the tax outright.

With every member of the House and a third of the Senate up for reelection, there is a good chance that some form of estate tax relief will win approval this year. Trucking needs to keep the pressure on Congerss, and on the administration, to eliminate this onerous tax.