The House Ways and Means Committee aims to begin working soon on fixing the mess that is the estate tax.
The committee’s newly minted acting chairman, Sander Levin, D-Mich., said they would start trying to retroactively re-instate the tax, which expired at the end of last year, according to Bloomberg BusinessWeek.
Heirs to multimillion-dollar estates now have to deal with complicated capital gains tax rules if they sell the assets, subjecting them to rates of between 15 to 28 percent. Congress may decide to give taxpayers a choice of paying either the estate tax or capital gains tax if they manage to pass legislation this time around.
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Also on the agenda is dealing with the Bush tax cuts, which are due to expire at the end of the year. In keeping with President Obama’s campaign promise, Levin said the committee would preserve the tax cuts for individuals earning less than $200,000 and couples making less than $250,000 a year.
The committee has been busy since Levin took over the chairmanship from Charles Rangel, D-N.Y., who is still being investigated for various ethical lapses. Levin presided over a vote Wednesday by the committee to pass a bill affording tax breaks to small businesses (see House Committee Passes Small Business Tax Cut Bill), and he was involved with passage by the full House of a temporary extension of unemployment benefits through May 5 and eligibility for the 65 percent COBRA health insurance subsidy for the unemployed through April 30.
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5 Comments
The rate is determined by the tax bracket of the person who is paying the capital gain.
I predict to see the choice only for those that have died in 2010 before they enact new legislation because it is getting too late to retroactive force the estate tax without huge political issues.
Posted by: CAnderson | March 18, 2010 10:28 AM
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I'm not really sure. The idea of giving people a choice seems to be one of those elements that's still in flux. Levin hasn't formally presented the proposed legislation. My guess is that if it proves popular on both sides of the aisle, then it would apply to any estate from the date of enactment.
Posted by: MikeCohn | March 18, 2010 7:38 AM
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Thanks Mike!
I agree the choice would likely not apply to to those who died before 1/1/10. My question is whether the choice would only apply to the estates of those who died between 12/31/09 and the date of passage of the new law, or would the law allow the choice for heirs of those who died after the date the new law becomes law.
Chip
Posted by: chips4748 | March 17, 2010 6:47 PM
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The 15 to 28 percent capital gains rate would kick in if the heir sells off more than $1.3 million in inherited assets. I believe the 28 percent rate just applies to collectibles, but it would be 15 percent for most types of assets.
Congress would probably try to make the estate tax fix retroactive to the beginning of this year, but not to prior years.
Posted by: MikeCohn | March 17, 2010 5:51 PM
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Is the choice under consideration between cap. gains and estate tax only to be available to heirs of those who died before the new law is passed, or to all for all time?
You said the cap gains rate cold be 15-28%. What determines the rate?
Chip
Posted by: chips4748 | March 17, 2010 5:36 PM
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