Kim Dixon at Reuters.com reports that House Ways and Means Chair Sander Levin anticipates reinstating the estate tax for 2010. The remarks were made at a seminar hosted by Reuters on financial regulation. I am not sure if they quoted Levin correctly but the following is the excerpt:
Another hot tax issue is the estate tax, which expired last year after lawmakers were unable to reach a deal to extend it. Levin said he expects to re-enact the tax retroactively at 2009 levels this year.
That would tax estates at a rate of 45 percent, after a $3.5 million exemption for individuals and $7 million for couples. Congress is compelled to act because if no action is taken, the rate jumps to 55 percent next year with a $1 million exemption amount.
Retroactive reinstatement of the estate tax would be pretty big news. Not sure if they quoted him correctly or not. Unlikely pure retroactive reinstatement will happen; most likely Republicans would block in the Senate. However, what may be possible would be to give estates the choice between the new law and the old law. There has been some talk of that. The reason would be to give smaller estates the ability to get a full step up in basis not limited by the present limits. A good advantage especially to the estate of the first spouse to pass away.
The article is found at http://www.reuters.com/article/idUSTRE63P5RL20100426
Corey Boles with the Dow Jones Newswire reports that House Majority Leader Hoyer believes the House Ways and Means Committee will take up the issue of the estate tax in June. He believes the committee will address the expiration of the “Bush Tax Cuts” that will otherwise occur on January 1, 2011. Those would include the income tax cuts but also the estate tax:
Hoyer also said he expected work to begin soon on legislation to renew the estate tax, which expired at the end of 2009. He said he didn’t know whether the two tax measures would be rolled into a single piece of legislation or passed separately.
The article is located at http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201004271119dowjonesdjonline000339&title=us-rep-hoyerwork-to-begin-on-renewing-bush-tax-cuts-in-june#ixzz0mKAfBopo
By Kevin Staker
The Senate Budget Committee in a party line vote approved a budget showing the estate tax returning to the law as it stood in 2009. They assume Congress and the President would change the law and not allow the exemption to go down to $1,000,000 on January 1, 2011 and the maximum rate to go to 55 percent. Instead they project the exemption will be $3,500,000 and the top rate 45 percent, and they are budgeting for such change to exist for the next two years.
Their committee will not decide such changes. Such changes must come from the Senate Finance Committee. However, they are a fairly savvy committee. Hence, we can see there is some movement in Congress towards not letting the exemption fall to $1,000,000 when the estate tax returns in 2011.
By Kevin Staker
The Daily Political reports that there is a move to pass estate tax reform in the Senate with only 51 votes needed instead of the normal 60 to overcome a filibuster. Senator Conrad, Chair of the Budget Committee, and Senator Baucus, Chair of the Finance Committee, are considering making the estate tax law change part of the five year budget plan. This would be passed by “reconciliation”, the same procedure used to pass the health care bill. Reconciliation only takes a majority vote. Hence, none of the Republicans would need to agree.
This is all pretty ridiculous. The Republicans are apparently and rather bizarrely holding out for estate tax repeal. This is not going to happen. The Democrats would not consent. Hence, we would go back to only a $1,000,000 exemption and 55 percent top rate on January 1, 2010, if nothing is done. Therefore, why they are not agreeing now on a $3,500,000 exemption and 45 top rate now is an example of how messed up Congress is at this point.
The article is located at http://www.dailypolitical.com/politics/senate-democrats-to-create-a-plan-to-cap-obamas-appropriations.htm
By Kevin Staker
DailyFinance.com in an article by Sara Hansard reports that Sander Levin, Chair of the House Ways and Means Committee, is concerned about the inequities of the present estate tax law. Rep. Levin was speaking a lunch at the National Press Club on April 19th.
The article states the following:
Levin indicated he wants to change the current estate tax law. In 2010, the estate tax expired, but under current law in 2011 it will revert to 2000 levels, when estates worth more than $1 million were liable for the federal tax. In 2009, estates below $3.5 million were not liable for estate tax.
“I find this uncertainty unacceptable and unfair,” Levin said. Many wills are written to leave as much to the children as possible below the threshold at which estate taxes must be paid, with the rest going to the surviving spouse. “Today that means that the children may well be left with nothing,” he said.
The article is located at http://www.dailyfinance.com/story/taxes/houses-levin-predicts-bush-tax-cuts-for-wealthy-will-expire/19445665/.
By Kevin Staker
House Speaker Nancy Pelosi as reported in an article at The Hill by Jay Heflin states that her Congress has or will cut taxes by $800 billion. She includes in that tally “permanent estate tax relief” that is “making its way through Congress.” Mr. Heflin assumes that means extension of the 2009 estate tax regime. That would mean she will push for a $3.5 million estate tax exemption with a 45 percent top rate along with a step up in income tax basis. She does not say whether she intends to push for a retroactive reinstatement of the 2009 law back to January 1st of this year, or the resurrection of such rules instead of the $1 million exemption and 55 percent top rate that will otherwise go into effect on January 1, 2011. There has been some talk in Congress of passing legislation that will give the estates of those dying this year the option of selecting the law that will apply: no estate tax but no step in income tax basis or $3.5 million exemption with the step up.
Please note, however, this is all still just talk. She may say estate tax legislation is “making its way” but there is no real action on the estate tax going on in Congress at the moment. And many of the informed are now saying nothing will happen until after the November election.
The article is at http://thehill.com/blogs/on-the-money/domestic-taxes/92405-pelosi-congress-has-cut-taxes-by-more-than-800-billion
The press release of Speaker Pelosi is at http://www.speaker.gov/newsroom/reports?id=0342.