"The imminent expiration of the federal tax on multimillion-dollar estates and a pledge by congressional Democrats to renew it retroactively next year marks a new phase in an ongoing battle over the levy.
Senate Finance Committee Chairman Max Baucus yesterday said Congress will seek to restore the tax retroactively in 2010 after Republicans objected to his efforts to adopt a stopgap measure to extend the current law for three months.
The tax now yields about $25 billion in revenue annually. The levy, on the books since 1916, is scheduled to lapse for a year on Jan. 1 under the provisions on a tax-cut bill enacted in 2001. It then would be reinstated in 2011.
The collapse of a last-ditch effort by Democrats to pass even a temporary extension surprised those on both sides of a debate that has raged for more than 15 years over whether to end what opponents term the “death tax”.
Lee Farris, senior organizer on estate tax policy for United for a Fair Economy, a Boston-based advocacy group lobbying for retention of the estate tax, said she hadn’t expected talks over a stopgap measure to collapse this week.
'I think it’s an outrage that with eight years notice, Congress couldn’t get its act together and prevent repeal of the estate tax,' Farris said.
The pledge to renew an estate tax retroactively presents both a legislative and a legal challenge, [...] [but] Farris said if Congress can resolve the issue quickly in 2010, the ramifications may be limited because most estates don’t file estate tax returns until about nine months after someone dies. [...]
For now, as of Jan. 1 the estate tax will give way to the capital gains tax when heirs sell bequeathed assets.
The tax, with a rate between 15 and 28 percent, would apply to estates in excess of $1.3 million and would be calculated on gains accrued since the asset was purchased. It would cover homes and land, stock certificates, collectibles such as art, and businesses."
Read the full article by Ryan J. Donmoyer on Bloomberg.com