The measure approved last week by the US House of Representatives that would eliminate the estate tax for all but the wealthiest families faces an uncertain future in the Senate.
The Permanent Estate Tax Relief Act of 2006 was drafted by Chairman of the House Ways and Means Committee Bill Thomas (R- Calif). It was passed through the house by a bipartisan vote of 269-156 on Thursday of last week.
Thomas says that the bill would give Americans “permanency and certainty for their estate tax planning.” However, he admitted that the Senate vote may be tough.
“I, along with the majority of House members, have voted time after time in a bipartisan manner to fully repeal the estate tax,” said Thomas. “So far, those efforts have died in the Senate.”
Senate Majority Leader Bill Frist (R-Tenn) asked Thomas to draft the compromise bill earlier this month. The goal is to grab the 60 Senate votes needed to avoid a Democratic filibuster.
The legislation is reported to eliminate the estate tax for 99.7% of all Americans. It increases the exemption amount to $5 million per person, and will charge a capital gains tax rate for all estates worth between $5 million and $25 million. Estates over $25 million would be charged a tax rate double the capital gains rate. The current capital gains tax rate is 15%.
The bill is designed to unify the estate, gift and generation-skipping transfer tax. The Joint Committee on Taxation has estimated that the bill will cost $283 billion in ten years.
Currently, the estate tax is gradually declining until it is fully eliminated in 2010. In 2011, the tax will return in full force, with an exemption of $1 million per person and a tax rate that tops at 55%.
There is no word as to when the proposals will be before the Senate, though Frist would like to schedule a vote before the summer recess.