Blogs Derek's Tax Blog Another Estate Tax Delay
The House is likely to delay estate tax legislation until after the Thanksgiving recess. This will virtually ensure that the legislation we see this year will be a one year extension of the current law. This isn't significant news since the one year extension was looking more and more like the only thing that would be considered due to the backlog of legislation in the Senate. What is interesting is that there appears to be a split developing among the Democrats on how to proceed on the Estate Tax. The Congressional Quarterly describes the split this way:
Liberals are upset that such an extension — which would cost $233.6 billion over 10 years and benefit the country’s wealthiest families — would not be offset, even as they have to scrape up every dollar they can to offset health care legislation.
This is something I predicted some time ago. The 2010 extension is easy. It is a tax increase. What is difficult is raising the exemption and lower the rates for 2011. That will be a tax cut. By punting this political football into next year's mid-term election debates, congress is increasing the estate tax uncertainty. Besides the mid-term elections, in 2010 congress will still be working on President Obama's agenda and dealing with the economy (including a new jobs initiative). It is not difficult to image that a year from now we will still not have a permenant estate tax bill and will be facing another one year extension or a return to the $1.0 million exemption.
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