The National Lumber and Building Material Dealers Association (NLBMDA) is taking a public stance against President Obama’s desired tax plan.

The proposal, announced by the president during the State of the Union address, would increase the top capital gains tax rate and increase the taxes paid on inherited capital.

As part of the proposal, the top tax rate on capital gains and dividends would increase from 24 percent to 28 percent, while increasing tax write-offs for middle-class families. Prior to 2013, the top tax rate on capital gains and dividends was 15 percent.

In addition to raising the capital gains tax rate, it would eliminate the current “step-up” basis that reduces the capital gains tax on inherited assets. In what amounts to a second death tax, heirs would also have to pay tax on all capital gains which took place before death. The protections for small family-owned businesses are inadequate, according to a statement put out by the association, and the step-up basis would remain only for assets given to a spouse or charity upon death.

“Many lumber yards are small family-owned businesses and increasing the taxes paid by their estates would only make it more difficult for them to pass on the business to the next generation,” says Jonathan Paine, president and CEO of NLBMDA. “Thankfully, this proposal is going nowhere in this Congress.”

Although improvements to the estate tax have been made in recent years, NLBMDA supports a full and permanent repeal. According to an association statement, the president’s proposal does not recognize the high asset base of lumber and building material dealers’ businesses or set the exemption level high enough to adequately cover the value of non-cash assets such as land, inventory and equipment.

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