U.S. Senate Rejects Costly Estate Tax Repeal but May Yet Cut It

On June 8th, Senate leaders failed to secure enough votes to join the House and permanently repeal the estate tax, as President Bush has proposed. As it stands now, the federal estate tax is set to phase out completely then be reinstated in 2011 with a $1 million exemption ($2 million per couple) and a 55 percent tax rate. That's because the 2001 tax cut bill needed to get around congressional budget rules.

Repeal would cost almost $1 trillion over a decade, and Senate alternatives that would reduce the tax would cost several hundreds of billions of dollars over the same period. Very few estates in Maryland and nationwide must pay this tax, but cutting it would substantially reduce revenue and hurt charitable giving.

Read our tax brief then tell us what you think about this tax.

Stephen Elmore