Sep. 12, 2021
The American Rental Association (ARA) is joining numerous associations in pushing back against changes that would increase taxes on family-owned businesses and farms.
ARA is a member of the Family Business Estate Tax Coalition (FBETC), which recently sent a letter to Rep. Richard Neal (D-Mass.) — chairman of the Committee on Ways and Means — and Rep. Kevin Brady (R-Texas) — ranking member of the Committee on Ways and Means. In the letter, the FBETC states its support for the continuation of stepped-up basis which prevents family-owned businesses and farms from being hit with a significant and damaging tax bill when a family member passes away. The FBETC opposes any changes to stepped-up basis that would increase taxes on family-owned businesses and farms — including administratively unworkable “protections” that simply delay destructive tax hikes.
On April 29, 2021, President Biden unveiled the American Families Plan, which proposed eliminating stepped-up basis with unspecified protections for family-owned businesses and farms. It remains unclear how and if these protections would shield future generations from substantial tax increases.
“ARA has long supported estate tax reform, including provisions passed in 2011 raising the individual exemption to $5 million ($10 million per couple) and those passed in 2017 raising the individual exemption to $11.2 million ($22.4 million per couple indexed for inflation),” says John McClelland, Ph.D., ARA’s vice president for government affairs and chief economist.
“Efforts to eliminate the step up in basis would effectively create a capital gains tax on top of the estate tax which has a maximum rate of 40 percent. Coupled with other proposals to raise the capital gains tax rate to that of ordinary income could result in an effective double taxation of inherited assets at a rate exceeding eighty percent. This would be devastating for many family-owned businesses and is why ARA opposes proposals to eliminate stepped up basis on inherited assets,” McClelland says.
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