Will Lame-Duck Deliver an Estate Tax Compromise?

Share |

Many people across the country were surprised late last year when Congress failed to pass an estate tax fix of any kind. It seemed impossible that Congress would allow the estate tax to lapse given the massive revenue loss. But here we are and the “tax-free” year is quickly coming to an end.

Now, it seems equally impossible to believe that Congress will allow the estate tax to surge from zero to 55 percent. There is some quiet conversation brewing about reaching an agreement on the estate tax before the end of the year.

According to reports in Tax Analysts, Tax Notes Today (sub. req’d) some Republicans may be leaning toward cutting a deal with Democrats in order to address this issue as quickly and cleanly as possible. For example:

Senate Finance Committee members Jon Kyl, R-Ariz., and Blanche L. Lincoln, D-Ark., have already proposed gradually reducing the estate tax over 10 years from a 45 percent top rate to 35 percent, an approach that would cost significantly less over the budget window than moving directly to a 35 percent rate in 2011.

Even though the Republicans seem poised to pick up seats in the mid-terms, they almost certainly will not have enough votes to pass a top rate of 35 percent with a per-person $5 million exemption let alone pass a permanent repeal. Reality may dictate an agreement somewhere in the middle between the Republicans preferred options and the Democrats desired 45 percent top rate.

Logic would suggest passing legislation during the lame-duck session this year. However, logic does not always rule in politics. So we will have to wait and see what happens post-election to figure out what estates will be facing next year.
Comments (0)
Please log in to comment:
Email
Password
 

Email
Name displayed with comments:
 

Oops! Someone has already registered with this username. Please try again.

Password
Re-enter password
  Email replies to my comments
 
 
design & development: Fathom Creative, Inc. (fathomcreative.com), Matthew Stevenson, Efrat Levush, Brent Maxwell