The Death Tax Repeal Permanency Act to abolish the federal estate tax has been introduced into the Senate by South Dakota Senator John Thune. Similar legislation in the House was introduced last year by Texas Representative Kevin Brady. The House bill currently has over 200 bipartisan cosponsors.

For 2012, the $5 million lifetime gift and estate tax exemption limits will rise to $5.12 million, $10.24 for married couples. But if Congress does not act, the fit and estate tax exemptions are both scheduled to revert to $1 million in 2013. The top estate tax rate will jump back to 55% with a 5% surcharge on taxable estates of between $10 million and $17.184 million.

Along with repealing the federal estate tax, Thune’s bill would also repeal the generation skipping transfer (GST) tax. That repeal would make permanent the maximum 35% gift tax rate and a $5 million lifetime gift tax exemption and maintain the stepped-up basis provisions important to family farms and businesses.

Repealing the death tax would create a 1.5 million additional small business jobs according to a recent study by Douglas Holtz-Eakin, the former director of the Congressional Budget Office. His study also says the repeal would decrease the national unemployment rate by nearly one percent.

Senator Thune’s legislation is supported by a wide variety of organizations, including the National Cattlemen’s Beef Association.

“Our priority is to keep families in agriculture and this tax works against that goal,” said NCBA President J.D. Alexander. “The appraised value of rural land is extremely inflated when compared to its agricultural value. Many cattle producers are forced to spend an enormous amount of  money on attorneys or sell off land or parts of the operation to pay off tax liabilities. This takes more open space out of agriculture and usually puts it into the hands of urban developers.”

Cosponsors of the legislation include: Senators Marco Rubio (R-Fla.), John Boozman (R-Ark.), John Barrasso (R-Wyo.), Roy Blunt (R-Mo.), John Cornyn (R-Texas), Mike Crapo (R-Idaho), Michael Enzi (R-Nev.), Charles Grassley (R-Iowa), Dean Heller (R-Nev.), James Inhofe (R-Okla.), Johnny Isakson (R-Ga.), John Kyl (R-Ariz.), Mike Lee (R-Utah), Richard Lugar (R-Ind.), John McCain (R-Ariz.), Mitch McConnell (R-Kent.), Jerry Moran (R-Kan.), Rand Paul (R-Kent.), Pat Roberts (R-Kan.), and David Vitter (R-La.).

Sources: Agri-Pulse, NCBA