We could not help but notice the repeated statements that required us to submit a declaration under penalties of perjury…that the information contains all the relevant facts, such facts are true, correct and complete.

ASSET’s mission is to bring together private business owners, farmers, ranchers, their employees and associations who are interested in solving a problem.  In America, we have the right to educate and advocate for our beliefs.  Some might even say it is responsible citizenship.

Young people cannot afford to not care. Literally.

As my colleagues and I begin to graduate from college and enter the workforce, we have grand, ideological plans of creating or joining successful companies. We dream about creating and building something that will be able to support our future families for generations to come.

If our plans and dreams remain the same, we need to be aware of the state of the estate tax in this country because it kills family and small businesses every year.

Estate tax is a tax collected by the IRS when the owner of a private company dies. This tax must be paid by whoever inherits the company within a few months of the owner passing. Under the 2010 Fiscal Cliff negotiations, there was an exemption for companies whose assets totaled to less than $5 million and then every dollar over that was taxed at a 35% rate. Now the Obama administration recently introduced their budget which calls for a $3.5 million exemption and a 45% tax on every dollar over.

A young (and kinda broke) person might look at these numbers and scoff, wondering why someone who has $3.5 million would be so distressed to pay this tax. The problem with that logic is that the $3.5 million is not liquid money. This worth is tied up in assets, which allows a company or farm to operate. This includes land, equipment and merchandise. If the owner dies unexpectedly, the family is put in a bind where they need to liquidate their assets very quickly in order to pay the IRS. This leads to fire sales and the families very frequently end up losing all or most of their company to a less than fair price. It also creates unanticipated and sudden unemployment for many employees.

Another problem with the current system is the very rich simply do not pay this tax. Those who have the means, put their money away in one or several nontaxable trusts to avoid paying this tax all together. This tax was meant to tax the super rich, but ends up just hurting small family companies and their employees.

It is a mess. But there is a solution. The ASSET solution.

ASSET stands for Americans Standing for the Simplification of Estate Tax. It is a nonprofit group that organizes in the grassroots and lobbies Congress for comprehensive reform on the estate tax.

The ASSET solution creates a process where death is no longer a taxable offense, but also maintains the revenue that the federal government does need in order to keep many important programs running in our country. Instead of paying a tax when the owner of a company or farm dies, the family is able to inherit tax-free and pay the tax when there is an economic event—not a death. A capital gains tax would be placed on the company when and if the family decides to sell. This process would actually generate more revenue for the IRS than the current one, and it is far less complicated. In order to remain revenue neutral and ensure that the IRS is not losing any revenue, the ASSET solution includes a temporary annual transition tax will be reduce proportionately until it is completely eliminated.

The ASSET solution is a bipartisan solution. Young people should be invested in comprehensive reform for estate tax because the policies that are implemented now will have a direct impact on our future.

About Elizabeth Virga:  Ms. Virga is an undergrad student from the University of Maryland College Park pursuing a degree in government.  Former intern from the Maryland House of Delegates and Americans Standing for the Simplification of the Estate Tax.

Joint Committee on Taxation

Washington DC – In estate tax news the Americans Standing for the Simplification of the Estate Tax (ASSET) commends Chairman Dave Camp & the Ways & Means Committee and the Joint Committee on Taxation on the release of their Joint Committee on Taxation Tax Reform Working Group Report.  The ASSET plan for change in estate tax method is included in the working group report with the broad strokes of the ASSET plan.

The JCT and Ways & Means have been reviewing all the submissions made to the work groups since the deadline April 15^th.  With more than 1,300 submissions it is significant that ASSET was included as a key stakeholder.  The committee will continue to get deeper into all details of reform over the coming weeks and months.

“ASSET has a way forward for all stakeholders” said Jack Fitzgerald, founder of Americans Standing for the Simplification of the estate tax.  “We can’t continue down the same path and achieve the kind of level playing field for private businesses and their employees.  We want to preserve those jobs and ASSET helps all sides.”

ASSET seeks to change the current estate tax collection method and substitute the revenue with the gains from the sale of certain tracked estate assets triggered by an economic event, not the death of a founder.

The report can be read at JCT & Ways & Means Tax Reform Working Groups

House Committee on Ways & Means

Washington DC – As part of Comprehensive Tax Reform, the Ways & Means Committee has formed Working Groups for various topics on tax reform.  Since the estate tax is not part of any single working group, ASSET has been reaching out to the Chair and Vice Chair of several working groups to help make sure that the estate tax is not left off the table when it comes time for reform.

ASSET has submitted written comments prior to the April 15th deadline in order to make the case for all our members, who include private business owners, farmers, ranchers and their employees.  Chairman Dave Camp in testimony just last week before the Small Business Committee has declared that the goal of the discussion draft released by Ways & Means is “to spur greater job creation and higher wages by reducing the burden the tax code imposes on small businesses.”  The estate tax is an incredible burden to small businesses because it drains capital in tax avoidance and preparation costs that could be spent to expand the business and increase wages.

It is our hope that the continued efforts of ASSET and our members will spur members from both parties to work together to solve the estate tax debate that even the administration is now chiming in to once again change the rules.  it is our shared belief that only by changing the collection method will the real harm cease and the danger associated with the current method of estate tax collection be over.

To read the ASSET testimony submitted click here.

The President’s budget is a subtle reminder that tax policy is never really permanent.  That is why the debate needs to be about the way the tax is collected, not the rates or exemption levels.  The same old tax policy will continue to take much needed private capital out of the economy and put it into the hands of the real aristocracy of today:  The Fortune 500.

Warren Buffet, for example, who heads a publicly traded company and espouses the importance of the estate tax, never mentions that he owns reinsurance companies that make billions from people paying premiums to hand over to the government in the event they don’t liquidate their farm, ranch or business in time to hide their assets in a trust to avoid paying the estate tax.

Private companies start with little.  They take risks.  They hire your recent graduate without experience.  They hire the people who don’t even have a college education.  They pay them good wages.  They often provide them benefits like healthcare and 401K.  They grow from one location, to two.  They become “successful.”   In essence, the government is a silent partner, taking profits in the form of taxes at a rate of 45% (federal) plus state…and at the end, if you haven’t properly prepared, will now confiscate 45% again if the President’s budget is passed.

We need real comprehensive tax reform that INCLUDES the estate tax, and a change in the collection method that results in preserving the business and the jobs it creates. ASSET is a business man’s approach to providing the government needed revenue (a debate for others over how much) in a fair and equitable way that first does no harm to the creator of the revenue.  Rather than spending millions on tax avoidance strategies and professional fees, the ASSET method of collection makes it easier for the taxpayer and the government to comply, and allows the business and farm to keep operating, paying even more taxes to the Federal, State and local government, and most importantly, growing jobs.

Back to the future was a very successful movie, but “back to the future” tax policies punish successful businesses and taxpayers.

Rob Smith – Americans Standing for the Simplification of the Estate Tax (Rob@SimplifyEstateTax.org)

ASSET offers solution in testimony for small business on estate tax to curb job losses.

Washington, DC – April 9, 2013  The U.S. House Small Business Committee is holding a hearing on ideas for simplifying the tax code and the need to address the estate tax and its impact on small businesses on Wednesday, April 10.  Jack Fitzgerald, founder of Americans Standing for the Simplification of the Estate Tax (ASSET), applauds the House Small Business Committee for shining the light on the impact of reform on small business, and calls for a continued reform of the estate tax collection method.

“Simplifying the estate tax will generate comparable revenues for the U.S. Treasury without the very destructive collection method of the current estate tax,” explains Jack Fitzgerald. “It is my hope that witnesses will help the Committee understand more fully the potentially devastating impact of the estate tax on small business owners and their employees even today.  I am equally hopeful that the Committee will consider our idea for a change in collection methodology that is initially revenue neutral, reduces compliance costs substantially, frees up capital, and does no harm to the Treasury or the taxpayer.”

ASSET has been working closely with staff and members of the House Small Business Committee and members and staff of the Committee on Ways and Means including Chairman Camp to increase awareness of the estate tax problem. ASSET advocates for a change in collection method for the estate tax that is transformative. Privately owned businesses are our Nation’s “jobs engine”, and the estate tax has the potential to wipe those out.  The revenue neutral ASSET proposal would eliminate the unintended consequences of the estate tax, like job losses and the drain on cash flow occurring from tax avoidance strategies.  Under the proposal, it will be easier for private businesses to continue to grow through reinvestment and the distortive effect of the estate tax will be eliminated.

ASSET is a coalition of more than 3,000 private businesses, family farms and ranches, and their employees, founded in order to change the collection method for the Estate Tax, ensuring that the most successful taxpayers pay their fair share but in a far less distortive manner.

At a recent Senate hearing, Finance Chairman Senator Max Baucus made illuminating statements that echo the calls for tax reform in the House of Representatives, while laying out goals for the Senate Finance Committee for 2013.

Senator Baucus wrote, “We need to take a scalpel to waste and inefficiency, not allow a hatchet to hack into American jobs.” He outlined three key goals for the 113^th Congress:  job creation, simplify the tax code for America’s families and businesses, and return stability and confidence to our economy.

The DOW Jones Industrial average soared on positive economic news on March 5^th.  This is an encouraging sign of the exuberance that Wall Street is feeling about the economy.  But feelings are fleeting.  The phrase, “In God we trust, all others bring data,” comes to mind.

Just over a week ago, Senator Baucus in his opening statement to the Senate Finance Committee pointed out that there are twelve million people actively looking for work who are unable to find a job.  An additional eight million Americans are working part-time, when they would prefer full-time positions.

America’s small businesses and family farms provide jobs. These employees help to grow businesses. These jobs are at serious risk if 40% of a family business or farm must be sold upon the death of an owner, or if they liquidate to avoid the tax in advance.  We need to protect these jobs.

The good news for Senator Baucus and the Finance committee is that the creative spirit and American ingenuity lives.  A growing coalition has been working on an out-of–the-box idea that’s gaining mainstream approval, and now has thousands of supporters. Lawmakers and think tanks are intrigued with the idea and are exploring it.  This idea is called the ASSET estate tax proposal.

It has indeed been close to thirty years since the last major overhaul of America’s tax code and in many ways the world has changed. But when a Wall Street Fortune 500 announces mass layoffs, the headlines on the following day talk about the company’s anticipated increased stock prices.  This is a reward for layoffs, often labeled as “finding more efficiencies” in SEC filings.  Contrast that with small business.

Small business is hiring those workers because they are job creators.  While both public and private businesses struggle with increased regulation and a growing tax burden, only private businesses face the long-standing threat of losing it all with the death of the owner, and the employees face the loss of their job.  ASSET stops that threat immediately, creating a level playing field in the marketplace.

The ASSET solution is both pro-growth and gives America’s family businesses and farm owners the certainty they need to compete and grow, rather than winding down operations or liquidating the business to avoid taxes.  The ASSET solution grows the economy.

If the Senate Finance committee wants to make it a priority to return stability and confidence to our economy, then we need to stabilize the job creators.  ASSET changes how estate tax is collected and preserves U.S. jobs, eliminates death as a taxable occurrence, and makes it more attractive to pay an estate tax than to pay to avoid it.

The ASSET solution is aligned with the goals of the Senate Finance Committee.  It has to be about the math first, and the politics second.

www.SimplifyEstateTax.org

The ASSET change in how an estate tax is collected preserves U.S. jobs, eliminates death as a taxable occurrence and makes it more attractive to pay an estate tax than to pay to avoid it.

From 1960 to 2009, the estate and gift tax raised just 1.2% of all IRS revenue, but has caused a drag on our economy that far outweighs the value of the revenue it brought in.

The rate during most of those years was 55% to 77% with an exemption from 60K to 600K.

Beginning in 2002, Congress brought the rate down gradually to 45%, with an exemption of $1m up to $3m, but the revenue to the Treasury remained approximately 1%.

This 1% of IRS revenue generated by estate tax is the equivalent of 1.86% of the AGI of the top 1% of taxpayers, or 2.47% of AGIs over $1m.  Joint Committee on Taxation (JCT) scores show the 2013 law of 40% with a $5,250m exemption reduces the expected revenue by over 2/3, reducing the 2.47% calculation to approximately 0.76%.  This means that the same revenue collected by the estate tax under current law could be obtained by collecting 0.76% of the AGI for taxpayers with AGI over $1 million in a given year.

The Tax Foundation says these taxpayers pay more in compliance and avoidance expenses than the revenues collected by our government.

Americans for Tax Reform (ATR) says the tax is “successfully avoided by the rich and famous who have the means to never pay the tax even over many family generations.”

The 2013 law helps some small businesses, farms and ranches but not those that are worth more than $5m and have a large number of employees.  They are forced to sell before death of the owner or liquidate after he/she passes away, to pay the 40% estate tax. This costs jobs and reduces the pool of private capital in America.

The magnitude of this problem is not well-documented, but between 1985 and 2009, out of $23 Trillion in AGI of the top 1% of taxpayers, only $426b was collected in estate tax.  Obviously the super rich don’t pay the estate tax.

The ASSET proposal would avoid the unintended consequences of the 40% rate and broaden the base so that the super rich would pay their share.  Taxpayers would save the avoidance costs by paying the much lower transition charge, which itself would be reduced annually until eliminated, as revenue from the 15% asset tax is collected.

By collecting both the transition and estate ASSET tax on form 1040, both the IRS and the taxpayer save money. For all these reasons the ASSET proposal is better than both current law and full repeal.  Taxpayers pay less and the IRS collects more.

ASSET preserves jobs and private capital.  A comparison is offered below.

For a PDF of the information click here.

Jack Fitzgerald of ASSET explaining the impact of the 40% estate tax on private businesses who are the biggest employers.

“Leave it to a car dealer to boil it down to a math problem, but I’m glad to bring the ASSET estate tax solution to the forefront during the working groups on tax reform in Ways & Means” said Jack Fitzgerald.  “40% is still a death sentence for many private businesses, and many owners will just liquidate, costing jobs, but you will never see an estate tax return.  That’s not good for the economy.”

Staff from more than thirty house offices attended today’s briefing to learn more about how the ASSET proposal will prevent job losses.  “ASSET offers a way to save jobs that inevitably are lost when people sell out in anticipation of an estate tax” said Brian Garst from the Center for Freedom and Prosperity.  “We need ideas like ASSET on the estate tax for lawmakers to grow the economy.”

ASSET advocates for a change in collection method for the estate tax that is transformative.  No jobs lost and the double taxation eliminated.

Will Dyess, founder of the Maryland Citizens Research Group that started at the University of Maryland explained the fiscal impact of the ASSET solution.  The study states that the situation of the United States as the recovery continues and policy actions necessary to sustain it are evident. Deficit reduction is the only feasible means by which to return to long term sustainable growth, and short term aggregate demand will be negatively impacted with tax increases but policy actions can be taken to minimize and even reverse some of the impacts. The ASSET proposal fulfills both of those roles with much efficiency.[1]

Alex Ayers from the Family Business Coalition also participated in the briefing describing the current state of the estate tax debate in Congress.

The ASSET coalition includes more than 3,000 supporters, including owners of private businesses, farm members and their employees, as well as groups such as the National Black Chamber of Commerce.