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Closing the “Valuation Discount Loophole” would preserve the integrity of the federal Estate and Gift Tax and generate up to $18 billion over 10 years, Americans for Tax Fairness Executive Director Frank Clemente said in testimony at the Internal Revenue Service today.
The IRS held a hearing on a proposed Estate & Gift Taxes Valuation Discount Rule (REG-163113-02), which would close the loophole allowing estate planners to place assets in specially created partnerships where the value of each partner’s assets get reduced for tax purposes. Use of this loophole can discount the value of partner assets by as much as 40%, significantly reducing the estate taxes owed.
“For the ultra-wealthy households who take advantage of this loophole, there’s no problem here. But for the overwhelming majority of families, this loophole means less revenue for vital public programs they depend on,” Clemente said in his testimony. “The estate tax is the only time that this wealth is going to be subject to tax since the heirs will receive all bequests tax-free.”
Americans for Tax Fairness also secured support for this rule from 45 national organizations who submitted comments to the IRS and from 18,930 of our members and supporters who did the same.
“What is the impact of this tax cut giveaway to the wealthy? Consider that closing this loophole could generate up to an estimated $18 billion over 10 years. In essence, by giving an $18 billion tax break to the wealthiest households in the country, we are collectively choosing not to address serious and significant social problems,” Clemente testified.
“It is unconscionable that tax loopholes exclusively benefiting the very rich should be allowed to continue. We’re hopeful that closing the valuation discount loophole is just the first of consistent efforts to preserve fairness and balance in the tax system, including by protecting the integrity of the estate and gift taxes,” Clemente concluded.
For Frank Clemente’s full testimony at today’s hearing, click here.
To see the letter of support for the estate tax rule signed by 45 national organizations, click here.
To see the letter of transmission for comments signed by 18,930 supporters, click here.