Senators negotiating a potential new estate tax bill that would take effect next year appears to be falling apart. According to the BNA Daily Tax Report, Senate Finance Committee Chairman Max Baucus (D-Mont.) told media members, “There is no agreement on the estate tax in either substance or process. None whatsoever.”
This news follows reports that were disseminated through various sources that a new tax bill was on the table, being discussed, and potentially close to being brought to a vote. The deal allegedly included a top tax rate of 35 percent with a $5 million exemption per individual. The values are no surprise as they are the same that various lobbyists indicated could be amenable to party members on both sides of the isle. The trouble is, current budgetary woes would be amplified by such a move, reducing federal tax revenues over the next ten years by well over $300 billion dollars.
Currently the estate tax is repealed for 2010 and will reset January 1, 2011 with a 55 percent top tax rate and $1 million exemption. (Comparatively, 2009 included a 45% rate and $3.5 million exemption.) While some key congressional members have indicated that they agree some changes would be positive, they insist that it is very difficult to move as far out as lobbyists would like with the present economic turmoil, new healthcare bill, inevitable wall street oversight bill, and the current deficit. Senator Bob Casey (D-PA) stated, “The idea that we’re going to give an incredible economic advantage to less than 1 percent of the population is really offensive to me, to understate it dramatically.”
We’ll see what happens as we move closer to January of next year. In the mean time, if you hold assets whose gross value is near or in excess of $1 million, better call your estate planner to see what types of precautions you can take to help protect your assets.
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