The Alexandria, Va.-based American Subcontractors Association (ASA), two-thirds of whose 6000 member businesses are family-owned, recently praised Reps. Jennifer Dunn, R-Wash., and John Tanner, D-Tenn., for introducing the Death Tax Elimination Act of 2001. The bill would repeal all estate, gift, and generation-skipping taxes, beginning this year.
ASA and other members of the Small Business Legislative Council (SBLC) have built support for estate tax reform for years. The Dunn-Tanner bill is a bipartisan piece of legislation that would reduce current rates — which range from 18% to 55% — by 5% each year until the highest rate bracket was eliminated by 2010. It would also retroactively increase the unified credit for estates claimed after December 31, 2000, to $1.3 million.
ASA supports the Dunn-Tanner bill in the U.S. House of Representatives, but the association is asking lawmakers to raise the unified credit to $5 million from the $1.3 million exemption proposed in the bill.
“An increase in the level of the exemption to $1.3 million would really help many subcontracting businesses survive to the second or third generation and beyond, but raising the limit to $5 million would even help more subcontractors,” says Richard Kohls, president of ASA and vice president of finance of the Fenton Rigging Co., Cincinnati.
The unified credit is commonly referred to as the “exemption” from the estate tax. Current tax laws only allow $675,000 worth of assets to pass tax-free to heirs. However, the unified credit is scheduled to increase to $1 million in the year 2006.