House Passes Estate Tax Relief Act

Estate Tax

From on November 6, 2006:

Washington D.C. – Congressman Ted Poe (TX-02) announced that the House of Representatives passed H.R. 5638, the Permanent Estate Tax Relief Act of 2006. This bill will make certain provisions in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) permanent. Without the passage of H.R. 5638, the estate tax repeal and all other provisions of EGTRRA would sunset on December 31, 2010. This would cause taxes placed on estates to revert back to their previous rates which were significantly higher. The current lower tax rate allows citizens who die to leave more to their beneficiaries, and less to the government. This is important to family owned businesses of all sizes, many were forced to sell their business because they couldn’t pay the taxes when the owner died.
“The old saying goes that the only two certainties in life are death and taxes. Under an estate or death tax, small farmers and family minded individuals who saved their whole lives to leave something to their children have to pay taxes, die, and then pay taxes again. It is unconscionable that the government punishes people by taxing them in life and in death. I urge the Senate to pass this bill quickly so that President Bush can sign it in to law,” Poe said.
Important Provisions of H.R. 5638:
1-Reunifies the estate, gift and generation-skipping transfer taxes – giving individuals greater flexibility to make estate planning decisions during life.
2-Increases the exemption amount to $5 million per person effective January 1, 2010.
3-Reduces the rate of tax on estates up to $25 million to the capital gains tax rate (15 percent).
4-Reduces the rate of tax on estates of $25 million or more to twice the capital gains rate (currently 30 percent).
5-Simplifies estate tax planning by allowing married couples to take full advantage of the $5 million exemption by carrying over any unused exemption to the surviving spouse.
Due to #5, advance estate tax planning would not be as important, and would obviate the need for credit-shelter (bypass) trusts in many cases.  Effectively, only couples with a net worth in excess of of $10 million would need to worry about estate taxes.
Since the Senate appears to be Democrat-controlled now, the chances of this bill passing is somewhat less now that than before the election.  Prior estate tax relief has passed in the House, only to fail in the Senate.
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