PA House unanimously votes to drop small business inheritance tax

Eliminating the inheritance tax for small businesses could be part of the 2013-2014 budget negotiations now ongoing in the statehouse, with a unanimous vote from the House of Representatives and a strong supporter leading discussions in the Senate.

The House passed House Bill 48 on Monday afternoon with a 198-0 vote. The legislation, sponsored by Rep. Steve Bloom, R-Cumberland, eliminates the inheritance tax on family owned businesses.

BLOOM: The Cumberland County lawmaker is the lead sponsor of eliminating the inheritance tax bill on small businesses.

The tax applies to real estate and all other business assets paid by siblings, children or other descendants who inherit a business as part of an estate.

"I was really pleased that all the Democrats supported the bill, along with all the Republicans, because it shows that the small businesses that grow the jobs are a priority for the House," Bloom said, "and it's obviously a bipartisan issue."

Earlier this year, Senate Majority Leader Dominic Pileggi, R-Delaware, sponsored similar legislation to eliminate the inheritance tax on small businesses, that passed out of a Senate committee.

As he was exiting the office of House Appropriations Chairman Bill Adolph, R-Montgomery, Pileggi said there was no conclusion about whether the inheritance tax on small businesses would see elimination this year. But it is on the table.

"We are discussing the possibility of including that," he said.

Bloom's bill would apply to estates passed on after June 30, 2013. The tax is 4.5 percent to 15 percent, depending on the heir's relationship to the deceased.

Bloom said he's hopeful the legislation will become part of next year's tax code, rules for commonwealth taxation that legally must be passed along with the budget. The support is there, Bloom said, citing Pileggi's agreement with the bill, and Gov. Corbett's interest in eliminating the inheritance tax on family farms last year.

"This is an urgent situation," Bloom said. "Every time a family business is shut down because they have to sell the assets to pay the death tax it's a sad day in Pennsylvania."

The Pennsylvania chapter of the National Federation of Independent Businesses supports the legislation.Executive Director Kevin Shivers said the exemption will help save jobs in Pennsylvania. He said families who cannot afford the inheritance tax will close down the business to cover the bill, leaving employees out of a job.

He, too, said he's hopeful lawmakers will act on the bill during budget season.

"I was very impressed by the overwhelming, bipartisan support for Steve Bloom's legislation," Shivers said, "which in my mind shows me there is real interest in this building to eliminate the inheritance tax."

Contact Melissa Daniels at melissa@paindependent.com