Legislation setting a 35 percent estate tax rate with a $5 million exemption is now law -- at least for two years . . ....Read more
GOP Delays Estate Tax Vote, Signaling Trouble
- June 30th, 2006
In a signal that they still lack the votes needed to bring the measure to the floor, Senate Republicans have postponed a vote on a House-passed bill that would exempt from the estate tax all but a few thousand of the wealthiest American families. GOP leaders now say they will not vote on the measure until after Congress returns from its holiday recess July 10.
On June 22, the House voted 269-156 for 'The Permanent Estate Tax Relief Act of 2006' (H.R. 5638), which would exempt from taxation individual estates up to $5 million and $10 million for a couple, while also softening the impact on even richer families. The tax rate, currently 46 percent, would drop to the rate assessed on capital gains, currently 15 percent. For those dying with estates valued at $25 million or more, the tax would be double the prevailing capital gains rate.
Critics called the measure "virtual repeal." The bill would exempt 99.7 percent of estates from paying any federal tax, affecting only about 5,100 of the wealthiest families. It would cost the U.S. Treasury $60 billion a year over the first five years after it became effective in 2011 -- 80 percent of the cost of repealing the estate tax entirely. Under current law, 12,600 estates -- less than 1 percent of all people who die -- will be subject to the tax this year, according to the Tax Policy Center, a non-partisan research institution in Washington.
Earlier in the month, a Republican-led effort for complete repeal came up three votes short of the 60 votes needed to prevent a Democratic filibuster. This time, House Republicans have added a tempting sweetener: a $940 million tax break for timber companies aimed at felling key Democratic Senators in Washington State, Arkansas and Louisiana. Washington's senators Patty Murray and Maria Cantwell, both Democrats, have long sought the timber tax break, and the GOP offer puts them in a tight spot. Both have said they are undecided about their vote, although their public comments on the bill have been "underwhelming," according to the Seattle Post-Intelligencer.
There are also reports of dissent in Republican ranks between conservatives who want a complete repeal and moderates who worry about the House bill's effect on the budget deficit.
For a Center on Budget and Policy Priorities' analysis of the House bill, click here.
For prior ElderLawAnswers news articles on estate tax repeal, enter "estate tax" in the "Search for More Articles" box at the upper right.
For a New York Times article, "Estate Tax Bill Could Hurt Charities," click here.(Free registration required and article is available free of charge for only one week.)
For more information on estate taxation, click here.
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Hale Ball Carlson Baumgartner Murphy PLC
Loretta Morris Williams is a certified elder law attorney by the National Elder Law Foundation. Ms. Williams was admitted to the Council of Advanced Practitioners, National Academy of Elder Law Attorneys (NAELA) in 2012. She serves as President of the Virginia Academy of Elder Law Attorneys. Ms. Willia...
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Margaret A. O’Reilly is an estate planning and elder law attorney with over thirty-five years of legal experience. Attorney O’Reilly graduated from Duke University with a degree in psychology, and received her law degree from Northeastern University School of Law in Boston, Massachusetts. For over 15 y...