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Lawmakers ready to permanently fix the estate tax at 2009 levels


Posted on Oct 29, 2009

Congress may approve legislation that would permanently fix the estate tax at current 2009 levels.  House Majority Leader Steny Hoyer (D., Md.) has come out in support of the move, and staff on the Ways & Means Committee plan to ensure that estate tax levels do not change from what they are today.

 

Right now the estates worth under $3.5 million are exempt from the estate tax (up to $7 million for a married couple).  Estate wealth over $3.5 million would be taxed at 45 percent.

 

Without this change – which should be in place by the end of the year – there would be no estate tax at all in 2010.  The estate tax would then reappear in 2011 with only a $1 million exemption with a tax of 55 percent for estates valued over that amount.

 

Some lawmakers would like to see a higher exemption amount and a lower tax for large estates.  One suggestion has been to exempt all estates worth under $5 million from the tax, and only tax those over that amount at 35 percent.

 

As it is the change carries a $233 billion price tag for taxpayers, since the current federal budget relied on the anticipated sharp tax increase in 2011.  Raising the exemption ceiling and lowering the tax amount for wealthy estates would further increase the cost, making such a change unlikely.

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