ESTATE TAX REFORM – MORE BILLS PROPOSED

          As reported here in an earlier article, there is a bill pending before Congress which will keep permanent the current Estate Tax exclusion of $3,500,000. In recent days two more bills have been proposed, one by Rep. Jim McDermott (D-WA) and the other by Rep. Travis Childers (D-MS).

          Rep. Jim McDermott, a senior Member of the House Ways and Means Committee, has introduced a bill which he named the Sensible Estate Tax Act.  In summary the Sensible Estate Tax Act would:

• Permanently exclude the first $2 million ($4 million for a married couple) of assets from the federal estate tax;
• As with the earlier proposal already before Congress, the Act would reform the estate tax to ensure that surviving spouses are entitled to any unused portion of the $2 million exclusion of their pre-deceased spouse;
• Re-unify the Estate Tax and Gift Tax rules; and
• Establish progressive tax rates on estates and gifts subject to tax.

          Congressman Travis Childers (D-MS) has likewise  introduced similar legislation affecting the Estate Tax;  however, his plan would increase the Estate Tax exclusion from $3,500,000 to $4,000,000 and would reduce the Estate Tax rate by five percent.

          Under both Bills, less than one percent of family estates would be taxed.

          With multiple competing bills before Congress, it seems  clear that the Estate Tax debate will be heating up over the summer. One interesting note is that all three current proposals are by Democrats. With taxes being a “hot-button” topic for Republicans, we can expect Estate Tax reform bills to be introduced in the future from the other side of the aisle.