The chairman of the House Ways & Means Committee has introduced a new bill to permanently raise the estate tax exemption level to $5 million in 2010.
Attempts to permanently repeal the tax, which is being phased out in the coming years under President Bush's first term tax cuts, failed to muster a vote in the Senate last week after successfully passing through the House last fall. The estate tax is set to resume in full in 2010.
Senate majority leader Bill Frist, R-Tenn., asked for a compromise bill last week, which was eventually brought forward by Rep. William Thomas, R-Calif. The structure of Thomas's proposal is similar to one previously suggested by Sen. Jon Kyl, R-Ariz., who saw his plan dismissed as Republicans opted to try for a full repeal. Frist has said he would like to see a bill completed by the end of the month.
Thomas's bill include plans to:
- Reunify the estate, gift, and generation-skipping transfer taxes;
- Create two estate tax brackets -- estates up to $25 million would be taxed at the capital gains rate and estates valued over $25 million would be taxed at twice the capital gains rate;
- Allow a surviving spouse to carry forward any portion of the $5 million exemption not used by the deceased spouse; and,
- A new 60 percent deduction for qualified timber capital gains, from the date of enactment through 2010.
This year, $2 million of an individual's estate and $4 million of a couple's is exempt from taxation. The remainder can be taxed at rates as high as 46 percent. The latest bill is scheduled for a House vote on Thursday.The full text of the bill is available at http://waysandmeans.house.gov/media/pdf/taxdocs/5638text.pdf/.
Previously on WebCPA:
Estate Tax Repeal Won't Get Senate Vote (June 9, 2006)
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