Chairman Thomas Introduces New Estate Tax Bill

As I indicated yesterday, House Ways & Means Chairman Bill Thomas (Republican from California) introduced new estate tax legislation (H.R. 5638), which would reduce – not repeal – the tax. According to a committee summary, the legislation would increase the estate and gift tax exemption amount to $5 million per person and $10 million per couple effective Jan. 1, 2010, and lower the rate of tax on estates worth up to $25 million to the capital gains tax rate, which is currently 15 percent (but scheduled to rise to 20 percent in 2011 unless, of course, the rate cut is extended). For estates exceeding $25 million, the rate of tax would rise to twice the capital gains rate (i.e., 30 percent). Chairman Thomas’ proposal closely mirrors a proposal from Senator Jon Kyl (Republican from Arizona), with one exception: The Kyl proposal would tax estates worth more than $30 million, not $25 million, at 30 percent.

It is not yet known if this new proposal will receive the support of the requisite 60 Senators. But, keep a close eye on Democratic Senators Ken Salazar (Colorado), Mary Landrieu (Louisiana), Mark Pryor (Arkansas) and Thomas Carper (Delaware) and Republican Senators George Voinovich (Ohio) and Lincoln Chafee (Rhode Island) to see if they vote in favor.

H.R. 5638 is expected to move directly to the House floor where passage is all but certain and then head directly to the Senate floor, bypassing committee action all together.

For more information, see my previous post.