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Permanent Estate Tax Bill To The U.S. House Floor?

On Behalf of | Dec 2, 2009 | Wills, Trusts, Estate Planning and Administration

According to the Congressional Quarterly Today, House Democratic leaders intend to bring a permanent estate tax bill to the House floor next week. The estate tax, which is set to disappear for a year on December 31, is the subject of numerous bills pending in the House.

The legislation (HR 4154), which is slated for House action as early as Wednesday, Dec. 2, 2009, would extend indefinitely the current estate tax exemption of $3.5 million and the top tax rate of 45%. If Congress does nothing by the end of this year, the estate tax will disappear Jan. 1 and then return in 2011 with a return to the $1 million exemption and a 55% top rate.

Republicans and some Democrats have long sought total repeal of the estate tax, but Democratic leaders want to prevent the estate tax from expiring even for a single year. Support for the permanent estate tax bill remains unclear among both Democrats and Republicans. Democratic moderates support a permanent estate tax fix, but some liberals oppose a tax cut from scheduled 2011 levels that would benefit many upper-income families in the middle of a recession.

On the other hand, as I have previously reported, business groups are supporting a bill that would gradually raise the exemption to $5 million, cut the estate tax rate to a 35% rate and index the exemption for inflation. Last week, after a series of closed-door meetings, House Ways and Means Democrats were considering either a one-year or a two-year extension of the 2009 estate tax structure, which would push the decision about a long-term restructuring to next year, after the mid-term elections. This year there has been virtually no public discussion of the estate tax among lawmakers who have been consumed by the health care debate.

Joseph W. Kenny is a director and shareholder of Hamblett & Kerrigan, P.A. and practices in the areas of estate planning and taxation. He is also a Certified Public Accountant with certification as a Personal Financial Specialist. You can reach Attorney Kenny by email at [email protected].