House Approves Estate Tax Bill 

• Melanie Waddell

The House of Representatives passed on December 3 an estate tax bill, H.R. 4154, introduced on November 19 by Rep. Earl Pomeroy (D-North Dakota), a member of the powerful House Ways and Means Committee, and 11 cosponsors.

The bill, the Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009, passed by a vote of 225-200, following the defeat of a last-ditch amendment proposed by Republicans calling for the “complete repeal of the death tax.”

The bill would extend the 2009 estate tax level to 2010 and make permanent the estate tax at a $3.5 million level for an individual and $7 million level exemption for couples and impose a 45% maximum tax rate as proposed by the Obama Administration. The bill now moves to the Senate. More than one Republican lawmaker has said the bill would be dead on arrival in the Senate; Democrats said they expected it would pass Senate muster.

Congress must do something before year-end or there will be no estate tax in 2010. Advisors like Myra Salzer, president and founder of The Wealth Conservancy, aren’t surprised by Pomeroy’s bill. “I never expected the estate tax to go away,” she says, despite Republican calls to eliminate what they call the “death tax.”

Salzer notes that Pomeroy’s bill “re-unifies the gift and estate exemption, making lifetime planning easier and enabling estate holders to get appreciating assets out of their estate.” But Salzer cautions that the U.S. is “headed for an inflationary environment [because] the Fed will need to keep its presses running to pay off our ever-increasing debt; plus, if the value of the dollar continues to fall, imports will become more expensive.”

As such, Salzer explains, “the [Pomeroy] bill should have some sort of incremental CPI provision to keep up with inflation, but I didn’t notice any such provision. In essence, that omission is a subtle way of insuring constantly increasing estate/gift taxation.”

• • 12/3/2009 3:08:05 PM
  • Jeff
  • Estate Tax Bill - No reunification
  • H.R. 4154 does not re-unify the gift and estate tax exemptions; the gift tax exemption would remain at $1,000,000 while the estate tax exemption would be $3,500,000.
• • 12/3/2009 4:39:03 PM
  • JED
  • Estate Tax
  • Glad to see it is back. No reason that the Paris Hilton and trust funder types avoid the tax. People can eliminate the tax with planning but they are to lazy to do it. Italy has 200 families that control everything in that country. Is that what we want here? A bunch of trust funders running everything? The super wealthy do not send their kids to war, send kids to best schools, minimal income tax because shift it to Cap Gains when they can, awash in corporate welfare ..... Yes they should pay. Glad to see it! $7,000,000 should cover most small business people. With planning they can take care of the next $10 to $20 Mil. etc.
• • 12/3/2009 5:27:07 PM
  • Ed
  • Estate Tax and Life Insurance Trusts
  • This would be a great time to start speaking with your clients about setting up ILITS for estate planning purposes.
• • 12/4/2009 9:15:05 AM
  • Ed Wright
  • Death Tax
  • Typical Democrat's tax and spend legislation, especially the fact that their estate tax bill has no CPI provision.
• • 12/4/2009 10:31:47 AM
  • michael
  • Throwing small business under the buss
  • With this vote, the democrats in the House sent a message to small farmers, ranchers, and business owners across the country. That message is: we don't care about you. The estate tax provides life insurance companies with $12 Billion a year in corporate welfare, and other than that, every one else loses. The federal government loses potential income tax revenue. Employees of small businesses lose their jobs. Small business owners and farmers lose their life's work. (see what I mean at http://estatetaxtruth.org/videos/) What is the point of this tax???
• • 12/16/2009 4:14:16 PM
  • mike
  • Throwing small business under the bus
  • I never understood the point of this tax. Leave it to the Democrats to punish people who actually decide to work hard and to do something with themselves. The people who risk everything by going into business for themselves, as opposed to the clueless liberal who while working at a 9-5 job, complains about how the rich are greedy. How they should share their wealth! The greedy ones are those that voted for an estate tax to begin with. This tax says, “If you continually do the right things with your business and money, we’re going to take about half of all you accumulated away from you when we think you have too much.” Yea, this law would really motivate Americans to create wealth for their families. It is difficult enough for Americans to leave a legacy to their families and to charities; there is no need to make it darn near impossible with this sort of tax! You want reform? Get rid of the estate tax!