Estate Taxes: Vote promised by House to Make 2009 Estate Tax Rate Permanent When Congress Returns
November 30, 2009

Steny Hoyer (D-Md.) and House Majority Leader formally announced the day before Thanksgiving 2009 that he will bring a bill to the House floor after the Thanksgiving recess that would make the 2009 estate tax exemption levels and tax rates permanent. The current 45 percent tax rate would remain in effect rather than having the rate to fall to zero in January 2010 and then rebound to 55 percent in 2011. The exemption levels for the bill (HR 4145) would also remain at current 45 percent level and provide individual tax payers with a $3.5 million personal exemption. Unfortunately, the bill which was introduced by Ways and Means member Rep. Earl Pomeroy (D-N.D.), would not index the exemption levels to inflation. So, the inflationary problem which beset families in the early 90's will rear its head again. Unfortunately this is all the more an issue with the current deficit spending and relaxed monetary policy in Washington. Together, these two are likely to create upward inflationary stress pricing estate assets far higher than their real value in the future.

It is unlikely that the exemption level will be increased as it was estimated last February by the Center for Budget and Policy Priorities (CBPP) that a relatively small rise from the current 3.5 Million Dollar level to a 5.0 Million Dollar level would cost the Treasury $380 Billion. A decrease in the rate of tax form 45 percent to 35 percent is estimated to cost approximately $91 Billion. Further, analysis by the CBPP indicates that an increase from $3.5 Million to $5.0 Million will have no significant savings for smaller tax payers, noting that only 3 in 100,000 would benefit from any such changes.

If you have questions, please contact:
Charles B. Jones, Esquire

CJones@TandLLaw.com
(410) 752-2468