Earlier this year, Congress again failed to repeal the federal estate tax.
As many practitioners anticipated (including this blogger), Congress went back to the drawing board to produce a bill which modifies, rather than repeals, the existing tax.
The proposed bill would:
- Reunify the
estate, gift and generation-skipping transfer (GST) taxes. - Increase the estate and gift tax exemption to $5 million per person.
- Reduce the estate tax rate for estates up to $25 million to the
capital gains tax rate, currently capped at 20%. - Reduce the
estate tax rate for estates of $25 million or more to two times the capital
gains rate. - Allow married couples to carry over any unused
exemption to the surviving spouse.
Will it pass? I predict that some version, perhaps with limited changes, will indeed pass Congress. Most Americans seem to favor estate tax reform but not estate tax repeal. While there are those in Congress hoping to push their own agendas (Frist and Kyl, for example) by introducing and re-introducing the same stale repeal bill destined to fail, this compromise bill seems to have some legs.
