The estate tax lapsed at the end of 2009, but is set to zoom from zero to 55 percent at the start of 2011 – if lawmakers don’t act. Without changes the exemption will start at $1 million, which may sound like a significant estate. However, many small and family-owned businesses say they fall well within that range and could be wiped out if lawmakers don’t make adjustments.
For generations, Anthony Timberlands, Inc., has been family-owned, but John Ed Anthony says if the estate tax rate is still 55 percent when he dies, his heirs will have to sell off the business. “What the estate tax will do to us at the time of my death is my son will have a visit from an IRS agent who will simply tell him, ‘Your $50 million dollar mill requires $20 million dollars,’” Anthony worries. He says the land where the company’s timber grows and its mills would have to be sold off in order to pay the tax. “When the estate tax strikes the industry in a small town,” Anthony warns, “[that impacts] everyone that’s in the community, everyone that is employed, all the peripheral businesses that make their money off the company.”
Senators Jon Kyl, R-Ariz., and Blanche Lincoln, D-Ark., have introduced a bi-partisan measure aimed at protecting people like the Anthony family. They are hoping Senate Majority Leader Harry Reid, D- Nev., will allow it to be voted on as a change to the Small Business Lending bill – the very companies Kyl and Lincoln worry will be impacted most. The Lincoln-Kyl fix would move the $1 million dollar exemption to $3.5 million and eventually to $5 million. It would also rein in the 55 percent tax rate into the neighborhood of 35 percent. “If the Small Business Lending bill is intended to help small business create jobs, wouldn’t it make sense to provide small business owners with the certainty that their tax rates aren’t going to skyrocket at the beginning of next year?” said Kyl.
Senator Bernie Sanders, I-Vt., is floating an estate tax proposal that will bring in more revenue to government coffers than the Lincoln-Kyl measure. Sanders says, given the country’s current financial situation, this is no time to give “the rich” a break. Sanders, who argues “we have the most unfair distribution of wealth and income of any country on earth,” says lawmakers who complain about our deficit and also fight the estate tax are hypocritical. Whether either proposal gets to a vote is now entirely in the hands of Senator Reid. Today he emphasized small businesses as key to the U.S. economy. Many of his colleagues say they hope Reid realizes how critical estate tax reform is to making sure those businesses survive.
Shannon Bream currently serves as anchor of FOX News Channel's (FNC) FOX News @ Night (weekdays 11PM-12AM/ET). She joined the network in 2007 as a Washington D.C- based correspondent covering the Supreme Court.