Estate tax may become another nail-biter debate when lawmakers return

Interest groups on both sides of the estate tax debate are unsure how the issue will play out when lawmakers return to Washington for the post-election lame-duck session. Lawmakers face a blistering tax agenda in the lame-duck session that, left undone, will cost taxpayers trillions of dollars beginning next year. One issue is how to stop the estate tax from returning to pre-2001 levels, which means estates worth more than $1 million are hit with a tax that could be as high as 55 percent. The levy is currently repealed but, barring congressional action, it will return next year to the aforementioned level. Republicans and more than a few Democrats oppose returning to pre-2001 law, but there doesn’t seem to be a consensus for how the tax should be modified. Sources close to the matter said the fix resuscitated 2009 law, which placed a 45 percent tax on estates exceeding $3.5 million. The levy would be indexed for inflation so fewer people would become ensnared by it. But Democratic leaders opted to delay action on the Bush-era tax cuts until after the election, thereby punting a resolution on the estate tax into the lame-duck session. Several compromises on the estate tax have been floated, which include doing a retroactive fix. Another would exempt farmers from the tax, which Jennings believes could be subjected to abuse. “There’s definitely not universal support for it, because exempting farms in the way [the bill] is written could create some pretty big loopholes,” he said, adding that indecisions surrounding the tax only increase the odds that a fix will not be in place by year's end...more