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Estate tax deal to be reached before June?

November 10, 2010

While Democratic leadership and the Obama administration focus their efforts on financial regulatory reform, a bipartisan effort is underway to reach a deal on the estate tax, or what some refer to as the "death" tax.

With a tight deadline of the May 31 Memorial Day holiday,, Senate Minority Whip John Kyl (R-Ariz.) said in late March that he would be focusing on fixing the estate tax because "[the delayed fix is] driving estate-planners nuts."

Days earlier, House Ways and Means Committee Chairman Sander Levin (D-Mich.) introduced a proposal to get the ball rolling on this issue.

If Congress fails to act quickly, the currently repealed estate tax will go back to 55 percent in 2011, with an exemption of $1 million per spouse. The good news, however, is that both parties agree against the previously proposed retroactive tax rate of 45 percent, which would go back to Jan. 1, 2010.

Sens. Kyl and Blanche Lincoln (D-Neb.) have been working together on a fix for the estate tax before it sunsets at the end of this year. Their proposal would enact a rate of 35 percent with an exemption of up to $5 million for couples.

If that were to become law by Memorial Day, then the law would be effective for everyone on June 1, 2010.

 

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