The estate tax expired on January 1, 2010. It remains to be seen whether Congress will reinstate it before it returns in 2011...Read more
House Votes Overwhelmingly for Repeal of Estate Tax
- July 1st, 2003
House lawmakers overwhelmingly approved 264 to 163 a bill to permanently repeal the estate tax. The House now hands the contentious issue on to the Senate, where the measure appears short of the votes needed to pass. Meanwhile, the National Farmers Union says the House bill would actually increase taxes for moderately sized family farms.
Sen. Charles Grassley, R-Iowa, chairman of the Finance Committee, said, "Right now, I think it would be difficult to get the 60 votes" needed to overcome an expected Democratic-led filibuster. A similar repeal bill fell six votes short of the 60 needed for Senate passage last June.
Supporters of a permanent repeal, however, were encouraged by the House vote, noting the bill passed by a larger margin than a similar measure last year. They plan a full-court lobbying press on the Senate.
Under current law, individuals with estates above $1 million ($2 million for joint filers) are subject to a 49 percent tax rate. The exemption gradually rises and the tax rate drops until 2010, when the estate tax disappears -- only to return to its pre-2001 level once the current tax bill expires in 2011. The bill passed by the House would make repeal permanent.
The estate tax generated about $30 billion last year, and most of these revenues came from estates valued at more than $20 million. Proponents of repeal have tried to characterize it as a way to save family farms, but the National Farmers Union (NFU) says that the House action actually could increase taxes for family farmers.
NFU President Dave Frederickson explained that under the House repeal proposal, the "stepped-up" basis clause contained in the current estate tax statute would be lost. This means that heirs to moderately sized estates could face capital gains tax liabilities. "This legislation would establish a large new tax on American families that have more modest means and that would never be subject to the estate tax," he said.
"This is not a farm issue," said House tax writer Jim McDermott (D-Wash.), adding that it is more about "rich people hiding behind combines."
Under the current estate tax law, wealthier individuals can reduce their estate tax liability by giving to charity. Some have argued that if the tax is repealed, people will give less to charity. Frank J. Doti, a professor of law and taxation law at Chapman University School of Law, analyzed charitable giving trends both before and after the modern estate tax was first imposed in 1917.
Doti found that charitable contributions increased dramatically after the estate tax was instituted, leading him to speculate that the reverse could happen if the tax were eliminated. Summarizing his findings in the Gift Planner''s Digest, Doti says that "The data may prove that irreparable financial harm would befall charitable organizations if there were permanent repeal [of the estate tax]."
To read an article published in the Salt Lake City Tribune on House passage of the estate tax repeal, go to: http://www.sltrib.com/2003/Jun/06192003/nation_w/nation_w.asp
Local Elder Law Attorneys in Ashburn, VA
Hale Ball Carlson Baumgartner Murphy PLC
Attorney Samantha Simmons Fredieu is an associate at Hale Ball. Ms. Fredieu graduated magna cum laude from Vermont Law School where she was the symposium editor on the Vermont Law Review, a production editor on the Vermont Journal of Environmental Law, and a member of the Moot Court Advisory Board. She has clerked for...
Needham Mitnick & Pollack, PLC
Susan Pollack served as Chairperson of the Falls Church Senior Citizens Commission from 1997 to 2011 and was on the Executive Board of the Falls Church Education Foundation. She has also served on the Board of Directors of the Alzheimer’s Association of the National Capital Area and is a member of the Arlington B...
Hale Ball Carlson Baumgartner Murphy PLC
Jean Galloway Ball is certified in Elder Law by the National Elder Law Foundation. She is a 1977 honors graduate of the National Law Center, George Washington University, and she did her undergraduate work at the University of California at Berkeley, graduating Phi Beta Kappa in 1971. She is admitted to practice in Vir...