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Sen. Tom Carper has co-authored legislation that would fix the federal estate tax at its current levels and keep it from being repealed in 2010.
The bill, co-sponsored by Ohio Republican Sen. George V. Voinovich, would tax individual inheritances of $3.5 million or more at a rate of 45%. The estate tax has been at this level since Jan. 1 and represents the final step in a reduction of the tax that began in 2001. At that time the tax rate was 55% and applied to inheritances of $1 million or more.
Though the tax is set to disappear completely next year, it is scheduled to return to 2001 levels for 2011, causing some to claim that next year would be a great time to die should Congress fail to act.
The issue is a hot one for many conservative members of Congress who have advocated the complete and permanent repeal of the so-called “death tax,” but Carper has said the country cannot afford to lose the revenue it generates.
“For the sake of families and small businesses, we can’t let the estate tax go back into full effect, and yet as long as we are running huge budget deficits we can’t afford full repeal, either. That’s why our commonsense solution would cost roughly three-fifths as much as legislation making the repeal permanent,” Carper said in a statement announcing the bill’s introduction Nov. 17.
According to Carper’s office, the rates proposed in his bill would affect less than one-half of 1% of all estates. Carper’s staff also said the costs of the bill will be offset, but it is not yet known how that will be accomplished.
Though the reduction of the estate tax was a key part of former President George W. Bush’s legislative platform, President Barack Obama does not support restoring the tax to pre-Bush levels.
While there’s been no word as to when or if Carper’s bill will advance through the Senate, Democratic leaders in the House have been working on similar initiatives in the Ways and Means Committee that would set the tax at 2009 levels for the long term.
Dover attorney Kevin M. Baird, a partner with Baird Mandalas LLC, thinks Congress will take action before the end of the year, but it probably won’t come up with a permanent solution.
“The general consensus seems to be that Congress will not allow the estate tax to expire in 2010, but they are not going to let it drop to the pre-2001 levels,” he said. “What’s most likely to happen is there will be a one-year patch and sometime next year they might take up more long-term fixes.”
Whether the estate tax ends up increasing or not, Baird said its important that Congress do something to give the public more concrete expectations for the tax going forward.
“When the law is constantly changing it makes it difficult to put a long term plan in place,” he said. “Regardless of what Congress does, the details are less important than the certainly. Patching and fixing it every year from a planning perspective makes it challenging.”
Email Doug Denison at doug.denison@doverpost.com.
Sen. Tom Carper has co-authored legislation that would fix the federal estate tax at its current levels and keep it from being repealed in 2010.
The bill, co-sponsored by Ohio Republican Sen. George V. Voinovich, would tax individual inheritances of $3.5 million or more at a rate of 45%. The estate tax has been at this level since Jan. 1 and represents the final step in a reduction of the tax that began in 2001. At that time the tax rate was 55% and applied to inheritances of $1 million or more.
Though the tax is set to disappear completely next year, it is scheduled to return to 2001 levels for 2011, causing some to claim that next year would be a great time to die should Congress fail to act.
The issue is a hot one for many conservative members of Congress who have advocated the complete and permanent repeal of the so-called “death tax,” but Carper has said the country cannot afford to lose the revenue it generates.
“For the sake of families and small businesses, we can’t let the estate tax go back into full effect, and yet as long as we are running huge budget deficits we can’t afford full repeal, either. That’s why our commonsense solution would cost roughly three-fifths as much as legislation making the repeal permanent,” Carper said in a statement announcing the bill’s introduction Nov. 17.
According to Carper’s office, the rates proposed in his bill would affect less than one-half of 1% of all estates. Carper’s staff also said the costs of the bill will be offset, but it is not yet known how that will be accomplished.
Though the reduction of the estate tax was a key part of former President George W. Bush’s legislative platform, President Barack Obama does not support restoring the tax to pre-Bush levels.
While there’s been no word as to when or if Carper’s bill will advance through the Senate, Democratic leaders in the House have been working on similar initiatives in the Ways and Means Committee that would set the tax at 2009 levels for the long term.
Dover attorney Kevin M. Baird, a partner with Baird Mandalas LLC, thinks Congress will take action before the end of the year, but it probably won’t come up with a permanent solution.
“The general consensus seems to be that Congress will not allow the estate tax to expire in 2010, but they are not going to let it drop to the pre-2001 levels,” he said. “What’s most likely to happen is there will be a one-year patch and sometime next year they might take up more long-term fixes.”
Whether the estate tax ends up increasing or not, Baird said its important that Congress do something to give the public more concrete expectations for the tax going forward.
“When the law is constantly changing it makes it difficult to put a long term plan in place,” he said. “Regardless of what Congress does, the details are less important than the certainly. Patching and fixing it every year from a planning perspective makes it challenging.”
Email Doug Denison at doug.denison@doverpost.com.
