Already with a lengthy to-do list before adjourning for its August recess, reports have Congress moving to address the future of the estate tax soon.
President Bush's 2001 tax cuts will gradually scale back the estate tax until 2010, but unless Congress passes new legislation, the tax on inherited assets will return in 2011 to the rates of 2001. The House of Representatives has approved bills to make the repeal permanent several times, most recently in mid-April, but procedural hurdles haven't been cleared in the Senate.
Senate Republicans have been floating a compromise to cut the estate tax rate -- which now ranges up to 47 percent -- to a flat 15 percent, the rate applied to most long-term capital gains. Last year, the estate tax generated $25 billion in revenue.
Another proposal would increase the estate tax exemption to $8 million or $10 million, in order to ensure that most family-owned businesses don't have to worry about paying the tax when their current owners die. A group lobbying for permanent repeal of the tax, the American Family Business Institute, released a study earlier this month saying that congressional actuaries have underestimated how tax cuts increase economic activity and result in an increase in revenues collected by the government. The Joint Committee on Taxation has estimated that repealing the tax would cost $140 billion in federal revenues.
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