Impact: This end-of-life tax assessment obstructs and discourages small business succession planning, weighing on the viability of loggers and other businesses supporting the wood supply chain, while also contributing to forest fragmentation and retention of land in forest.
The Issue: The federal Estate Tax, or “Death Tax,” has become subject to mounting criticism, particularly now that Republicans control both House and Senate, and efforts to repeal it have launched in both chambers. Currently, exclusion thresholds--$5.43 million per individual, or $10.86 million per couple—limit its direct effects to about 2 out of every 1,000 annual deaths. The tax’s impact on estates subject to the tax, however, is considerable--the top rate is 40%, and if assets include the assessed value of a business or timberland holding, the burdens the tax imposes can be disastrous.
Status: The Death Tax Repeal Act, HR 1105, sponsored by Rep. Kevin Brady (R-Texas), passed the House April 16, 2015 by a 240-179 vote. The bill repeals the federal estate tax and, significantly, retains a provision called “stepped up basis” that allows capital gains to escape taxation if they are passed on to heirs. In the Senate, Sen. John Thune (R-South Dakota) has sponsored a similar estate tax repeal bill, S 860, which had 38 cosponsors as of June 8, 2015—all Republican. The bill is awaiting action in the Senate Finance Committee.
FRA’s 2018 Policy Priorities
The U.S. wood supply system is the largest and most highly developed in the world, providing the raw material that furnishes our country’s seventh largest industrial sector: forest products. Overregulation threatens this system’s ability to continue to serve both its economic and environmental goals in a sustainable manner, especially in view of the large role small business plays in this system’s function and management. FRA monitors and engages public policy processes that impose unreasonable costs and overly burdensome processes on the wood supply chain or that impede sensible reforms that might enhance competitiveness.
Paralysis by overregulation places in jeopardy the livelihoods of mills, employees, and dependent communities; harvesting and forest operations contractors and their employees; and the ten million private, institutional, and industrial forest landowners that support its resource base. In the end, a dysfunctional wood supply system would not only be economically devastating but would expose the forest resource to wildfire and disease, leaving watersheds and wildlife habitat vulnerable and compromising the character of our country’s landscape.
What is overregulation? The intrusion of government into the management of private business to an extent not justified by the duty to promote the general welfare or to achieve transparency in exercising that duty.