Estate Tax May Stay At '09 Levels - Clarified

Under current law, the estate tax would be phased out in 2010, but would return in 2011 with a $1 million per-person exemption and a 55% maximum tax rate.

The AALU has been urging Congress to set permanent estate tax rules and include a reunification provision.

AALU lobbying has focused on the reunification issue, and the Joint Tax Committee says the provision would cost only $4 billion in federal revenues over 10 years, Stertzer says.

“AALU understands the fiscal pressures associated with reform, but the low cost of reunification compared with the critical social policy of preventing the perverse incentive to hold assets until death rather than gifting those assets during life is an extremely beneficial policy” for everyone, Stertzer said.
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CLARIFICATION: Early readings of the budget resolution agreement indicated that the estate tax provision would be considered through the streamlined “budget reconciliation” process, which cuts the number of votes needed to get a measure through the Senate to 51, from 60. It also appeared that the budget resolution agreement provision would include estate and gift tax reunification, along with a portability clause that would eliminate the need for couples to set up a trust for a “second to die” spouse to get the entire $7 million exemption. The AALU has since informed us that the agreement appears to call for handling the estate tax provision under “regular order,” and that it does not appear to include reunification and portability provisions.