The House passed legislation December 3 to make the current estate tax rate of 45 percent permanent and exempt $3.5 million of assets from the tax. Many Republicans in the Senate, however want a lower rate and higher exemption. With health care reform dominating its agenda, the Senate couldn’t hash out this issue.
The House then planned to attach a two-month extension of the estate tax on today’s defense bill, but dropped the idea when it became clear that could jeopardize that bill’s passage.
So next year, Congress will try to reinstate the estate tax. They’ll probably try to make it retroactive so there is no tax-free window for death, but lots of experts say that would be unconstitutional.
- ABC News, “Democrats: Estate Tax Repeal to Be Short-Lived”
- Wall Street Journal, “Baucus to Try Next Year to Extend Estate Tax Retroactively”
- Bloomberg, “Estate Tax to Expire Temporarily as Extension Dropped”
Congress might not find it not so easy to quickly reinstate the elapsed tax in 2010. Every vote to impose the death tax will be one that can be described as a “vote to raise taxes on family-owned businesses by 45 percent.” Or 35 percent, or whatever the rate may be.
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