Tax News

CCH (cch.taxgroup.com) reports:

  House lawmakers approved the Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Bill of 2009 (HR 4154) by a vote of 225-to-200 on December 3. The legislation would permanently extend the current exemption for estates up to $3.5 million per individual and $7 million for married couples and set a maximum rate of 45 percent on estates above this threshold.

  House Ways and Means Committee Chairman Charles B. Rangel, D-N.Y., said the bill would provide certainty for businesses. In addition, the measure would repeal the enactment of carryover basis rules that would require many heirs to pay additional taxes on built-in gains of property inherited starting in 2010.

  "This bill simply continues present law at current rates and exemptions. But it does not abolish the estate tax altogether, which would be a severe mistake," said House Majority Leader Steny H. Hoyer, D-Md. He noted that a permanent repeal of all estate taxes would cost billions of dollars and only benefit a small number of wealthy families. Hoyer explained that, although HR 4154 is not paid for, lawmakers were able to add the statutory pay-as-you-go (PAYGO) rules to the measure. HR 4154 includes the Statutory PAYGO Bill of 2009 (HR 2920) that passed the House in July (TAXDAY, 2009/07/23, C.1).

  Ways and Means ranking member Dave Camp, R-Mich., who did not vote for the bill, said HR 4154 extends the current rates, which he termed as excessively high. Since the tax rate is not indexed for inflation, it will affect more families each year, according to Camp. Based on historical inflation data, the value of the estate tax exemption could thus be cut in half with every passing generation, GOP lawmakers said. If current law is not changed, the estate tax will disappear in 2010 for one year. He said the bill is unlikely to reach the president's desk before the end of 2009, since the Senate is fully engaged in the health care reform debate.

  By Stephen K. Cooper, CCH News Staff

House Passes Permanent Estate Tax Relief for Families, Farmers, and Small Businesses

House Rules Committee Report Providing for Consideration of HR 4154, the Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009,
HRRepNo 111-350

Joint Committee on Taxation Technical Explanation of HR 4154, the Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009, JCX-57-09

Joint Committee on Taxation Estimated Revenue Effects of HR 4154, the Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009,
JCX-58-09