Witnesses asked the Senate Finance Committee to help taxpayers plan for the future by adopting a simpler, more predictable estate tax system.
Sen. Max Baucus, D-Mont., chairman of the committee, started off the hearing by emphasizing the unpredictability of the current system.
“A Chinese proverb says, ‘Planning lies with men; success lies with heaven,’” Baucus said. “That’s certainly true with the estate tax. No matter how hard people plan, what estate tax their family will pay can be largely a matter of chance. It can be pretty much up to heaven.”
Dennis Belcher, a Richmond, Va., lawyer who was chairman of the Task Force on Federal Wealth Transfer Taxes, said many clients complain about their inability to plan for the federal transfer tax burden.
Belcher, who testified on his own behalf and not on behalf of any organization, said taxpayers can plan more effectively if they know what the law will be in the future.
The confusion is especially great among owners of family owned, closely held businesses; Belcher said:
“Because of the illiquid nature of a closely held business, federal transfer taxes present a serious obstacle to a closely held business surviving the death of the business owner,” Belcher said. “The shortfall of sufficient liquid assets to pay the federal transfer taxes incurred as a result of the business owner’s death may necessitate a forced sale or liquidation of the business, thereby preventing the continuation of the business.”