Thursday, December 03, 2009

Congress Grapples with Estate Tax

Next week, the United States House of Representatives will vote on whether or not to extend the current estate tax rates or allow them to expire at the end of 2009. While members of Congress support the extension, the biggest roadblock will be getting legislation through the Senate, who will need to account for spending. The 10-year extension is estimated to cost $234 billion since the rate was due to increase in 2011.

"We believe that a permanent extension of the existing law is the best policy," Steny Hoyer, the chamber's majority leader, told reporters.

Preserving the current rates will be harder in the U.S. Senate because that body's rules require a way to pay for it.

A 10-year extension of the tax would cost an estimated $234 billion versus allowing the tax to revert to a higher rate in 2011, as currently scheduled, according to congressional aides.

Senate Finance Committee Chairman Max Baucus has proposed extending the current 2009 law and indexing it to inflation, but the Senate's intense focus on healthcare and limited days in the legislative calendar add further hurdles.

"We need to take the time to deal with it," said Senator Kent Conrad, a Democrat on the finance panel charged with tax issues. But he acknowledged the challenges in getting it done before the end of the year.

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