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Senate Refuses Repeal

By Children’s Home Society of Florida Foundation

On July 21, 2010, Sen. Jim DeMint (R-SC) offered an amendment to the unemployment bill that would repeal the estate tax. Sen. DeMint noted that the White House is creating a difficult environment for “small businesses that are already facing higher income taxes and higher investment taxes.”

The Proposal

The proposed amendment was defeated on a vote of 39-59. Democratic Senators Blanche Lincoln (D-AR) and Ben Nelson (D-NE) supported the abolition of the estate tax. Republican Senators Olympia Snowe (R-ME), Susan Collins (R-ME) and George Voinovich (R-OH) opposed the abolition of estate tax.

Assessment

Sen. Lincoln and Sen. Jon Kyl (R-AZ) continue to advocate an estate tax compromise. Under the compromise, the $3.5 million exemption from 2009 would be increased over 10 years to $5 million and the top 45% estate tax rate would be reduced to 35% over that same time frame.

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Editor’s Note: The political pressure on the Senate continues to rise. Following the March death of Houston oilman Dan Duncan with a $9 billion estate, the news media noted that the government had lost $2 to $3 billion on that estate alone. When New York Yankees owner George Steinbrenner passed away with an estimated $1.1 billion estate, news media suggested that he hit a “home run” by dying in 2010 with no estate tax. While action is not likely before the election, there now seem to be two general patterns to a potential Senate compromise. First, the estate tax exemption will start at $3.5 million and increase to a higher number over ten years. Second, the estate tax rate will begin at 45% and decrease again over that same decade. The House majority has held strongly to a $3.5 million exemption and 45% top tax rate, so the final compromise would also need to reflect their preferences.

Conclusion

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Filed under: Estate Planning, Financial Planning | Tagged: abolition of estate tax, Ben Nelson, Blanche Lincoln, estate tax, estate tax repeal, George Voinovich, Jon Kyl, Sen. Jim DeMint | 9 Comments »