Estate Tax Update
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In the last few weeks, since H.R. 5297 was passed, Senate Minority Whip Jon Kyl (R-Arizona) and Senator Blanche L. Lincoln (D-Arkansas) have been working on a plan concerning the future of the estate tax. Together they have advanced a proposal requiring the Senate Finance Committee to amend H.R. 5297 so as to permanently set the federal estate tax rate at thirty-five percent (35%) and raise the estate tax exemption amount to five million dollars ($5,000,000), the exemption level to be phased in over a 10-year period and indexed for inflation.
The Kyl-Lincoln proposal would also provide for a "stepped-up" cost basis for inherited assets, as existed in prior tax years, and would instruct the Senate Finance Committee to offset the difference in revenue loss resulting from their proposal as compared to the Obama administration's proposal. [The administration has proposed a 45% estate tax rate coupled with a $3.5 million exemption amount.]
Yesterday, July 20, 2010, the U.S. Senate prepared to resume consideration of H.R. 5297, with the goal of completing work on the Senate version by the end of this week. However, Senate Majority Leader Harry Reid (D-Nevada) is expected to disallow most amendments to the House bill, specifically including the estate tax proposal of Senators Kyl and Lincoln. Senator Kyl told reporters yesterday that, whereas Senator Reid did not want to address any estate tax issues at this time, he (Kyl) and Senator Lincoln were looking at other options for moving their proposal forward. Stay tuned.
