Congressional activity is heating up regarding the estate tax. As Republican and Democratic members of Congress wrestle with prospective changes to the Bush income tax cuts, the debate over federal estate tax also is on the legislative agenda.
Although the estate tax is not directly related to whether or not families earning more than $250,000 continue to receive an income tax cut, members seeking a universal solution have proposed estate tax changes as well. The initial proposal by Majority Leader Harry Reid was a 45% estate tax rate on assets exceeding $3.5 Million. This would be an improvement from the law scheduled to take effect January 1, 2013, which is a maximum 55% estate tax rate on estates exceeding $1 Million.
This week there will be two new proposals, one where Republicans would extend for one year the current estate tax levels of a 35% tax and a $5.12 million exemption, and a Democratic plan that does not address the estate tax at all. Neither proposal is expected to find favor at this time.