A group of senators have stepped forward with a new estate tax proposal as the potential for an estate tax holiday looms ever nearer. The proposal would gradually reduce the current estate tax rate 1% each year from the current 45% to a fixed 35% in 2019. The personal exemption would follow a similar schedule growing $150,000 each year, reaching a cap at $5 million.
With the estate tax set to expire at the end of the year if no action is taken by Congress, tax professionals around the country have been wondering not if, but when a passable proposal would arise. It appears that a bipartisan group of senators have found a solution that just might manage to garner support on both sides of the isle in Washington. It appeared very likely that a vert short extension of the 2009 estate tax would be implemented, covering the next year or so while a more permanent solution is formulated.
According to the Wall Street Journal however, most Republicans and a few Democrats do not want to allow the estate tax matter to be swept under the rug for another year. It appears that the proposal may even gain additional Democratic support if offsets can be found to make up for losses in tax revenue, anticipated to be in the $87 billion range, which is a major sticking point for President Obama and other Congressional Democrats.
Optimism is running high that some tax legislation will get done despite limited time on the Senate floor for matters outside of health care reform. Members of Congress appear motivated to find a permanent solution favorable to small business owners and the wealthy, and are seeking alternatives to raise the needed support. Suggestions to help this proposal have included other tax increases, spending cuts, or tying the legislation to other bills such as reducing R&D credits or trade preferences for businesses.
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