Legislation setting a 35 percent estate tax rate with a $5 million exemption is now law -- at least for two years . . ....Read more
Senate Affirms Support for $3.5M Estate Tax Exemption
- March 14th, 2008
Members of the Senate have reaffirmed their support for reducing estate taxes rather than eliminating them and for fixing the tax at the level that will prevail in 2009 under the current law.
While working on the fiscal year 2009 federal budget resolution, Senators voted on a series of amendments to the non-binding resolution. Although no actual legislation was being voted on, the balloting gives a sense of the Senate's leanings.
Senators voted 99-1 for a proposal introduced by Sen. Max Baucus (D-MT), chairman of the Senate Finance Committee, to set the estate tax at the 2009 level and index the exemption for inflation. In 2009, the per-person estate tax exemption will be $3.5 million and the top tax rate will be 45 percent.
An amendment introduced by Sen. Jon Kyl (R-AZ) to increase the individual estate tax exemption to $5 million and cut the maximum tax rate to 35 percent lost on a 50-50 vote. (For an analysis of the Kyl amendment's budgetary impact, click here.) Two similar amendments lost by wider margins. Significantly, an amendment to abolish the estate tax, once a cherished goal of the Bush administration, was not put forward.
Under the Economic Growth and Tax Reconciliation Act of 2001, the estate tax will expire for the year 2010, followed in 2011 by an individual exemption of $1 million and a top tax rate of 55 percent, unless Congress acts in the interim.
The Senate Finance Committee will hold a hearing on estate taxes in mid-April, but Congress is not expected to act on the issue this year.
For a National Underwriter article on the Senate votes, click here (registration required).
For earlier ElderLawAnswers coverage of the estate tax, enter "estate tax" in the search box above.
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