Senate Indicates Position on Estate Taxes
The United States Senate appears to have shown its support for reducing estate taxes rather than eliminating them and for setting the exemption at $3.5 million. While working on the fiscal year 2009 federal budget resolution, Senators voted on a series of amendments to the non-binding resolution. Although no actual legislation was being voted on, the balloting gives a sense of the Senators’ take on the issue.
Senators voted 99-1 for a proposal introduced by Sen. Max Baucus (D-MT), chairman of the Senate Finance Committee, to set the estate tax rate at the 2009 level and index the exemption for inflation. In 2009, the per-person estate tax exemption will be $3.5 million and the tax rate will be 45 percent.
An amendment introduced by Sen. Jon Kyl (R-AZ) to increase the estate tax exemption to $5 million and cut the rate to 35 percent lost on a 50-50 vote. Two similar amendments lost by wider margins. Significantly, an amendment to abolish the estate tax, once a major goal of the Republican Party, was not put forward.
Under the Economic Growth and Tax Reconciliation Act of 2001, the estate tax will expire for the year 2010, followed in 2011 by an individual exemption of only $1 million and a 55% tax rate. The Senate Finance Committee will hold a hearing on estate taxes in mid-April, but Congress may not act on the issue this year.