Estate Tax Set to Expire (Temporarily) as Congress Waits
As we enter the last quarter of 2009, the future of the federal estate tax remains uncertain.
- Will the estate tax be repealed for a year in 2010? (Doubtful.)
- Will Congress enact major tax legislation by the end of 2009? (Also doubtful -- more likely, we will see a one-year fix to avoid repeal in 2010.)
- Will the federal estate tax exemption revert to $1,000,000 in 2011 or will Congress increase the exemption, perhaps by freezing the exemption at 2009 levels as suggested by the Obama administration? (A couple months ago I predicted a $3.5 million exemption, but I have to admit that suspense about this question is building.)
- Will the top tax rate be 55% or 45%? (Probably 45% in 2010 (the one-year quick fix), but who knows about 2011!)
An article appearing in the WSJ -- Estate Tax Faces Its Own Life-and-Death Struggle -- provides a status report:
President Barack Obama and congressional Democrats are united behind an effort to block a scheduled year-end repeal of the estate tax. But prospects are blurred by divisions between the House and Senate over the contours of a restored tax, as well as Capitol Hill's focus on health care . . . .
Officially, Republicans in Congress would like to see it disappear on schedule. . . . But very few believe that is possible. . . .
[S]harply different bills in the House and Senate could make a long-term solution elusive. With health care and routine spending bills jamming the Senate calendar, an estate-tax fight -- first on the Senate floor, then with the House -- could make passage of a bill virtually impossible this year, House and Senate aides say. Lawmakers likely would fall back on a one-year extension of the current rate and exemption and leave the fight to next year. . . .
Even [Democratic Senator Blanche Lincoln of Arkansas, who is up for re-election in a state where opposition to the estate tax is solid,] has her eyes elsewhere. 'Our complete focus is on health care,' said Ben Portis, a spokesman for the senator. 'On the estate tax, there will be a time and place.'
Thank you to Professor Paul Caron, author of the Tax Prof Blog, for posting a summary of the WSJ article earlier today.
