Blogs Derek's Tax Blog Senate Tax Bill Includes Estate Tax
Following up on the House Tax Bill that was passed yesterday, Senate Democrats Introduced a Tax Cut Bill that, unlike the House version, includes a provision on the Estate Tax.
The main substance of both of these bill are extend the Bush era tax rates for families earning $250,000 and less per year and individuals making $200,000 and less.
The Senate version of the bill includes a provision to create a permanent estate tax at the 2009 rates and exemption levels. If passed, it would be the first time the Senate has passed a bill that includes estate tax provisions like this. Prior to the flurry of last minute activity last December, the Senate did pass a bi-partisan bill that included a $5.0 million exemption.
The House bill was described by Republicans as a political maneuver. The best quote of the day coming from incoming Minority Leader John Boehner, calling it “chicken crap.” The Senate version seems to include even more provisions, many of which are popular to Republicans, which are included purely for a political reason.
The Senate bill has no real chance obtaining the 60 votes needed. The New York Times reports that “some Republicans were feeling so emboldened by the strength of their negotiating position that they called on party leaders to reject any proposal for a temporary extension of the lower tax rates, and said they should insist on making all of the lower rates permanent, including a permanent elimination of the estate tax, which lapsed this year but is set to return in 2011.”
Last December, pressured by special interest groups, Republicans were ready to abandoned their position on permanent repeal of the estate tax and accept a lower exemption of $5.0 million. Today, they are split into three groups: those who want repeal, those who want a $5.0 million exemption, and those who will accept a $3.5 million permanent exemption.
Meanwhile the Lame-Duck House has not taken a position on the Estate Tax. The most they could be expected to go for would be the $3.5 million exemption; however, considering Nancy Pelosi’s rhetoric (“Giving $700 billion to the wealthiest people in America does add $700 billion to the deficit”) from the debate of the House bill, that may even be a long shot. Even farther in the shadows on this issue is President Obama. I can’t recall the last time he made a specific statement on the Estate Tax. Well it is true that President Obama made a campaign promise to extend the exemption at $3.5 million, the deficit give him some easy cover if he wants to move away from it.