- Senate Action on the Estate Tax Imminent?
- September 14, 2005 | Author: Ronald D. Aucutt
- Law Firm: McGuireWoods LLP - McLean Office
Our alert dated August 11, 2005, reported that just before the United States Senate adjourned for the August recess, Majority Leader Bill Frist of Tennessee took action that could make a Senate vote on the future of the federal estate tax possible shortly after Labor Day. Supporters of outright and permanent repeal of the federal estate tax need 60 votes to accomplish that, and they still appear to be short. Compromise discussions have considered federal rates as low as 15% or 20% (state rates, where applicable, would increase the total tax burden), with an exemption in the $3 to $8 million range.
Although there has been no announced deal yet, it appears that serious discussions are continuing. While by no means certain, a Senate vote next week remains a real possibility.
Even if the Senate agrees to substantial reductions in the federal estate tax, it will be under budgetary pressure not to make the changes effective immediately, as many repeal supporters would prefer. The most likely effective-date scenario is probably to postpone the changes to 2010, the year when the federal estate tax is scheduled to be "repealed" -- but for only one year -- under the law enacted in 2001.
There appears to have been very little interest or activity on Capitol Hill relative to the "base broadening" changes mentioned in our August 11, 2005 alert. But that does not mean that such possibilities can be ignored. Measures to tighten tax rules, once suggested, are never forgotten.