House Ways and Means Chairman Sander Levin met today with reporters. He stated the committee would begin next month discussing various tax issues, including the estate tax. He will push for retroactively re-instituting the estate tax, which expired for one year beginning on January 1st. Businessweek quoted him as follows:
“The sooner we do it, the better,” Levin said. The lapse of the levy and a complicated capital gains tax that replaced it was making it hard for families to plan their affairs, he said.
Apparently Levin is considering giving the estate of individuals who die in 2010 the choice of escaping the estate tax or carryover basis:
One possibility being considered, he said, would let heirs choose to pay the capital gains tax that replaced the estate levy if that is more beneficial. “We have to write it so we don’t disrupt estate planning in this country,” he said.
He obviously has no idea what he is talking about. There is no “capital gains tax” that replaced the estate tax. Instead, what replaced it was no “step up” in income tax basis at death above $1,300,000 plus another $3,000,000 on a transfer to a spouse. We are obviously in for a long haul if the head of the committee does not understand the issues.
I believe it is highly unlikely the Senate will agree to a retroactive estate tax for 2010. We are already too far into the year for it to be palatable to the more conservative Senate.
Jay Heflin at the Hill reported:
He hedged on whether he would support a lower estate tax, like the one being discussed in the Senate that offers a 35 percent tax rate and $5 million exemption.