DALLAS, TX--(Marketwired - Feb 17, 2015) - Experts are warning Americans to prepare for crippling rates of taxation, following the release of President Obama's 2016 budget proposal. If the President's entire budget is approved, the U.S. will have the highest death tax in the world. With inheritance tax rates climbing above 57%, many family-owned businesses will not survive beyond a single generation.

Under current law, heirs pay a 40% tax on estates valued above $5.3 million, with inherited gains valued at the time of death using the step-up basis. President Obama's proposed death tax would effectively tax estates twice -- once as inheritance and a second time as capital gains. By eliminating the step-up basis, the new law would tax heirs for all gains earned on an estate over a lifetime. Because Obama also wishes to raise capital gains tax to 28%, the new death tax rate would be at least 57%. In states with an additional inheritance tax, rates would total between 65% and 68%. 

"This proposed death tax will rob millions of Americans of their legacy and discourage innovation," says Joe Garza, a tax and estate attorney who works with entrepreneurs and owners of middle-market companies. Garza explains, "While the President pays lip service to small businesses, he's also making moves that will run them into the ground."

Chairman of the Family Business Defense Council, Dick Patten, calls this plan "a dagger in the heart of family-owned businesses," explaining that most family-owned businesses would have to be sold in order to pay the taxes owed. Indeed, the proposed death tax would not only affect the ultra-wealthy; it would also impact families set to inherit small or mid-sized estates. Under the new plan, only the first $100,000 of a single person's inheritance (or $200,000 of a married couple's) would be exempt from the capital gains tax.

Opposition to the additional death tax is strong; many Republicans are currently working to eliminate the death tax altogether. However, Garza warns Americans, particularly business owners, to prepare for the worst. "In the event of this tax, you will need to consider how your estate will affect your loved ones," Garza says. "Passing along the family business may not be the best option."

Contact Information:

Garza & Harris
2300 Three Gallery Tower 13155 Noel Rd.
Dallas, TX 75240
Web: http://garzaharris.com/