By a vote of 225 to 200, the House of Representatives passed a bill yesterday that will extend the current estate tax rate of 45 percent, as well as the exemption levels of $3.5 million for individuals to $7 million for couples. At this rate, less than 1 percent of all estates will be affected by this rate.The bill did not garner a single Republican vote and 26 Democrats joined the Republicans in voting no. Still, the bill passed, and this is a strong first step to setting a permanent estate tax rate before the single-year full repeal was set to come in 2010, after which the rate was set to go back to the levels that existed before President George W. Bush took office. Under current law, and unless Congress continues to act, the tax rate for estates in 2011 will be 55 percent with an exemption level of $1 million.
Typical arguments were made during the debate. Republicans called the tax a “death tax” and claimed it would be unduly harsh on farmers and small business owners, and Democrats charged their colleagues across the aisle with wanting to shield wealthy Americans from taxes, according to Ben Pershing’s reporting for the Washington Post.
The Tax Policy Center, a think tank, reports that .23 percent “of all estate are subject to taxation in 2009. . . Since the exemption . . . is not indexed for inflation, that percentage will gradually increase over time.”
For their part, according to Tom Steever with Brownfield Ag News, the American Farm Bureau Public Policy Executive Director Mark Maslyn "says he's pleased, in spite of the fact that the organization could not support the House measure in the first place. . . 'What passed the House today was better than doing nothing, because it would expire this coming January, but then come back to life in 2011 with exemption levels of only a million dollars per person and 55 percent tax rate,' Maslyn told Brownfield Thursday from his office in Washington, D.C."
As the Post reports, it is unclear at this time what Senate approach may be taken. Legislation has been introduced that addresses the issue in the Senate, but other issues are dominating the calendar. Therefore, the Senate is likely to pass a one-year exemption of the current rate before moving on a bill of their own, which must garner sixty votes, in the coming year.
To read the Washington Post article on the House action on the estate tax, click here.
To read the Steever article, click here.
Posted: 12/04/09
