The House passed a measure on Thursday that would extend the death tax indefinitely. Whether or not the Senate votes on the issue, and when, could mean very different things for this unpopular tax.
For now, the Senate is distracted by health care legislation, and it’s unlikely that they’ll find the time to vote on death tax legislation. That means the tax will expire in 2010 – completely. It will be reduced from it’s current rate of 55% to zero.
If the Senate continues to not vote on the issue, it will spring back up to 45%. In other words, it will eventually be reduced. But if you own a small business and are about to die, you should choose to die next year rather than the year after, because for one year, you don’t have to pay anything.
“It is grim,” said Ryan Ellis, the director of policy at Americans for Tax Reform.
The Senate will probably take the measure up at some point. But Ellis thinks that if they take it up later rather than now, taxpayers will get a better deal.
“There are some people that want to cut a deal now, but I don’t think we're going to get as good a deal now as we're going to get next year,” he said.
With the current make-up of the Senate, Democrats would have to get 60 votes to pass a new version of the death tax, or eliminate the gap year, or do anything. Ellis thinks that will be near impossible – and might further Republicans’ goal of eliminating the tax entirely.
Brendan Buck, the Republican Study Committee spokesman, said that no matter what the Democrats are or are not able to do with the tax this year, the GOP was determined to eliminate it.
"We're currently scheduled to see the death tax go away next year, but Democrats can't bare the thought of Americans seeing how much sense it makes to eliminate it. So we're going to end up with a permanent 45% tax. If we take back control, you can bet that putting the estate tax to death once and for all will be on our priority list,” a Brendan Buck, the Republican Study Committee spokesman.
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