By By Jo Bonner
During this past week, the House of Representatives considered two important pieces of legislation which each hold important benefits for the American people.
The first, the Death Tax Permanency Act of 2005, passed on April 13 by a vote 272-162 – the fourth time in four years the House has passed such a measure. One day later, we also passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, by a vote of 302-126.
In both instances, the core purposes of these bills are to protect the American consumer. I would like to take just a few moments this week to explain some of the basic points of each and touch on the benefits both may potentially yield.
Protecting American taxpayers
As it stands now, an elimination of the federal estate tax – known by its more sobering title as the "death tax" – has been gradually phased in during the past few years and is due to be completely repealed in 2010. Unfortunately, the repeal is scheduled to be eliminated in 2011, and millions of Americans will once again be forced to pay tax on any inheritance they may receive from their parents or other loved ones.
I have long felt this tax is inherently unfair. Under the current system, an American worker who is attempting to build up some sort of inheritance to leave for future generations must pay taxes on their income and on any property they own. Following their death, their beneficiaries must in turn pay taxes on what they receive. In some cases, taxes are sometimes paid two, three, or even four times on the same money and property as they are passed from one generation to the next.
Along with the multiple levels of taxation this entails, there is also the consideration of the time and cost involved in preparing the required forms. The Federal Death Tax Form (Form 706) is a 40-page form which comes with 30 pages of instructions. It has been estimated that to completely and accurately fill out this form would take on average an entire 40-hour work week.
Additionally, as the regulation regarding the "death tax" currently stands, taxpayers are uncertain at what level they will be paying estate taxes – on the current rates which have been gradually decreased during the past few years, at a zero rate when the full repeal takes effect in 2010, or (if this legislation does not pass both houses of Congress and become law) at the original full rate in place prior to the repeal phase-in.
By making the repeal of the "death tax" permanent, the House of Representatives has ensured that taxpayers will have the ability to finalize with certainty their long-term financial planning decisions and not worry about any additional burden which might be placed on their families. The burden of passing this legislation now falls to the Senate, and I am hopeful they will take swift action on this measure to ensure future generations of taxpayers no longer have to worry about the "death tax."
Shielding consumers from bankruptcy system abuses
During the past several years, select individuals and businesses in the United States have used federal bankruptcy law as an easy way out of the difficult task of paying off their debts. I certainly don't want to imply that there has not been a very legitimate need by people in extremely difficult financial circumstances for which bankruptcy presents the most feasible option for financial recovery.
However, the main objective of the Bankruptcy Abuse Prevention and Consumer Protection Act has been to foster a sense of personal responsibility among the American people and make it more difficult for men and women to use bankruptcy as a way of shirking their debt repayment obligations. While it is true that Congress doesn't truly have the power to legislate responsibility, we do have the authority to develop systems that protect the American consumer and those who attempt to legitimately meet their financial obligations.
This bill has targeted four main areas in the field of bankruptcy reform: