I, for one, am just reeling about the possibility that the House may vote on legislation to extend current estate tax rates. Shocked. I mean, there are, what, four weeks left until the end of the year? That’s just crazy.
Tax professionals have just gotten comfortable with the idea that there’s no news on the federal estate tax front. We’ve grown used to thinking that nothing will change. Congress’ inability to act is kind of our Snuggie.
You see, when the current rules passed way back in 2001 as part of EGTRRA (Economic Growth and Tax Relief Reconciliation Act), we all chuckled. These, we thought, won’t stick around for long – especially that whole “federal estate tax repeal” bit for 2010. That’s because the rules for 2010, what with their carryover basis insanity, could just never happen. And that sunset provision which kicked the old rules back after a year of “repeal”? Just political suicide on both sides.
So it was going to be fixed. For real.
And then 2002 came and went.
And… well, you get the picture. We kept believing that Congress would do something, anything, one way or the other.
And here it is, the end of 2009, just days away from a year that, administratively, the IRS is far from prepared for – and we still got nothing.
So it was a bit surprising to not hear any kind of hoopla about the fact that a vote might happen next week on the federal estate tax legislation from Rep. Earl Pomeroy (D-ND). Except for the whole “even a yes vote means nothing” bit.
The Pomeroy bill is actually not bad – it would basically freeze the tax where it is now: a 45% top tax rate with a $3.5 million personal exemption. But there’s still squabbling to be had.
Dems say it could cost too much. Since the current legislation would actually reduce the exemption to $1 million and raise the top tax rate to 55% (as it was pre-2001), the Pomeroy bill would be considered a tax cut. The cost? $233 billion over the next 10 years.
The GOP says it’s not enough. They want either permanent repeal (read my lips: ain’t gonna happen any time soon) or a significant increase in the exemption, somewhere between $5-10 million.
Even if the Dems could push the bill through the House, there’s no way that they’ll get it through the Senate. But that doesn’t matter: there’s no word when (or if) the Senate would even consider a similar bill.
Finally, some consistency.
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