Blogs Derek's Tax Blog Estate Tax Drama!
This week has shown some progress on Capital Hill for the future of the Estate Tax. Both the House and the Senate have been working on non-binding budget resolutions that will be the framework for the budget that will eventually be signed by the President. Before the resolutions were passed on Thursday there was some maneuvering on the Senate floor.
The marathon voting session capped a 13-hour day that included Vice President Biden and brain cancer-stricken Sen. Edward Kennedy (D-Mass.) both returning to the chamber to cast votes on an estate-tax initiative. From The Hill.
But that was not all! During the debate the Republicans and 10 centrist Democrats were able to include an amendment that would increase the estate tax exemption to $5 million per person.
Farm state senators were also a factor in the Senate skirmishing over estate tax relief.
On a 51-48 roll call, Majority Leader Harry Reid (D., Nev.) narrowly lost control to a coalition of Republicans and centrist Democrats demanding a higher $5 million exemption rate for the estate tax—up from $3.5 million– and a lower maximum rate of 35%, compared to 45% under the budget plan.
The leadership countered with a parliamentary ploy, effectively raising a new point of order against any future bill that makes such estate tax adjustments without providing equal relief to Americans earning less than $100,000 a year.
It passed 56-43, with the help of a handful of Democrats from Arkansas and Nebraska who switched their votes in favor of the leadership. From Politico.
Don’t get your hopes up for a higher exemption. The House’s resolution sets the exemption at $3.5, the same as President Obama’s budget. The House’s version is good for five years at a cost of $72 Billion. The Senate’s version would cost $250 Billion for 10 years. The estate tax cut stands in contrast to Obama’s signature "Making Work Pay" tax cut, which did not make it into the resolutions. Other significant elements of the President’s budget are also missing.