Taxation & Estate Planning

Senate Passes Amendment to Reduce Estate Tax & Raise Exemption

By michael

Lots of movement on this in the last week.

This morning Brad Wrightsel wrote here about the Senate having passed “a nonbinding but symbolically important amendment” rasing the exemption to $5 million and lowering the rate to 35%.

The Hill, The New York Times, Fox News and the Wall Street Journal all carry their own versions of the story, most of which focus on the “larger” story (get it!?) of the overall budget itself.

From The Hill:

One key fight was settled early in the evening, when senators passed an amendment increasing the estate tax exemption to up to $10 million, a move that seeks to force Democrats to cut spending from their budget. Couples currently enjoy only a $7 million exemption from the estate tax, called the ?death tax? by Republicans because it applies to the transfer of property of the deceased.

The amendment increases the exemption for individuals from $3.5 million to $5 million, and it cuts the estate tax rate from 45 percent to 35 percent. The amendment, proposed by Sens. Blanche Lincoln (D-Ark.) and Jon Kyl (R-Ariz.), passed 51-48 with bipartisan support. All 41 Republicans supported it, along with a group of centrist Democrats.

Despite all of the attention, however, the estate tax relief proposal is unlikely to survive conference talks since those will include House Democrats who have not backed the idea previously.

From The NYT:

Among the amendments that won Senate approval was a bipartisan proposal that would raise the estate tax exemption by $1.5 million, to a total of $5 million, and reduce the tax?s maximum rate by 10 percentage points, to 35 percent.

Fox News (as usual) has their facts wrong, but its the most entertaining read:

Under Obama’s plan, the tax would have expired in 2010 and remained at its 2009 level — meaning the government would get 45 percent of a dead person’s estate valued over $3.5 million.

The amendment would reduce the estate tax rate to 35 percent and increase the exemption to $5 million [per person.]

Busy morning!

Full post as published by The Ohio Trust & Estate Blog on April 03, 2009 (boomark / email).