by: Jordan Silverman — ASSET
Last Thursday, December 11, 2014, the ASSET bill (H.R. 5872) was introduced into the House by Rep. Andy Harris (R-MD). This news represents a significant victory for private businesses owners, ranchers and farmers, and the millions of Americans still struggling to find work.
The ASSET bill signifies the beginning of a new discussion on federal estate tax reform, one in which there is no longer a dichotomy between those who are in favor of the estate tax and those who advocate for full repeal. Our plan for reforming the estate tax simply involves changing its collection method from a single lump-sum collected upon one’s death to a voluntary system in which one may opt-in to paying a fractional surcharge on one’s modified AGI.
An important, yet frequently misunderstood, aspect of the ASSET bill is the fact that it is “revenue neutral” – a phrase that often comes with negative connotations. A common misconception regarding bills that are deemed revenue neutral is that for a bill to remain revenue neutral, the middle class would have to shoulder more of the tax burden. Well, this is not the case.
Over the long run, according to former Senator Bob Bennett (R-UT), the government could actually end up with more revenue, not from taxes but from economic growth. This is because taxpayers will no longer shelter assets in unproductive trusts to avoid estate and gift tax dues. Instead, they could use these assets to start new business ventures and reinvest.
This bill lays down a marker to get the discussion started on alternative solutions to reform the federal estate tax, in addition to the traditional narrative of full repeal versus increasing estate tax revenue to the IRS. With a GOP controlled Congress set to take over in 2015, estate tax reform seems likely to take shape as a part of more comprehensive tax reform efforts. While a repeal bill seems unlikely to pass under the Obama administration, they might not object to the optional ASSET bill, which represents a unique, bipartisan solution that saves jobs.
With the U.S. creating more private sector jobs in 2014 than any year since the 1999, let’s keep that momentum going and pass the “American Solution for Simplifying the Estate Tax Act” to spur job creation and economic growth!