Members of the House today voted 220-200 to pass H.R. 4154, the Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009 bill.
Members of the House today voted 220-200 to pass H.R. 4154, a bill that would make the 2009 45% estate tax rate and $3.5 million per person exemption permanent.
The Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009 bill, introduced by Rep. Earl Pomeroy, D-N.D., would maintain the so-called “step-up in basis” tax rules, which protect many heirs from paying additional capital gains taxes on inherited assets.
Observers expect the Senate to pass a measure that will merely extend the current rate on a temporary basis. The Senate probably will deal with the issue when it works on comprehensive tax reform legislation in 2010.
H.R. 4154 does not include provisions for indexing the estate tax for inflation, reunification of the estate and gift taxes, or portability.
A portability provision would let the heirs of the second-to-die in a family to deduct both the husband and wife without the need to establish a trust.
“It is time to bring certainty to the estate tax so families across the country can properly plan for their estates,” Pomeroy said during a 4-hour debate on the bill. ” By making the 2009 estate tax level permanent we are addressing the uncertainty of not just next year, but of the years to follow. This bill provides the certainty families need to make long-term decisions and avoid the estate planning roller coaster that will result from current law.”
The Association for Advanced Life Underwriting, Falls Church, Va., has welcomed House passage of the bill.
“We are pleased that the bill establishes a permanent rate and exemption level as it will enable individuals and business owners to plan with peace of mind and certainty,” Sarah Spear, an AALU official, says.
But “we also strongly support including the important estate planning feature of reunification as this legislation moves through Congress,” Spear says.
Tom Currey, president of the National Association of Insurance and Financial Advisors, Falls Church, Va., says the House vote “starts Congress down the road toward reaching a conclusion on this most contentious issue before the end of 2009.”
Under current law, the estate tax tax is set to expire in 2010, then return in 2011 with a 55% tax rate and a per-person exemption of just $1 million.
He says the key to NAIFA support of action on the estate tax is that the rules be “permanent, specific, and predictable.”
“Congressional rules should also be sustainable, politically, over time,” Currey says.
Like the AALU, NAIFA is emphasizing that it supports gift and estate tax reunification.