OpenCongress Blog

Blog Feed Comments Feed More RSS Feeds

House to Vote on Making Bush's Estate Tax Cuts Permanent

December 2, 2009 - by Donny Shaw

The House of Representatives this week is set to vote on a bill that costs one-third of what health care reform proposals in Congress costs and, unlike the health care bills, is completely unpaid for and would be a direct hole in the federal budget. The bill, sponsored by Blue Dog Earl Pomeroy, would make permanent the lower the estate tax rate that was enacted by President Bush.

View the bill page and learn more:

H.R. 4145 — Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009

The estate tax is imposed on all taxable wealth of a deceased person that is transferred to another person by way of a will or state intestacy laws. In 2001, when President Bush came into office, one of his first actions was to sign a bill that gradually phased out the estate tax from 55% to 45% with a complete repeal of it in 2010. At the same time, he also increased the amount of each estate that would be exempted from the tax from $675,000 to $3.5 million between 2001 and 2009. Since the changes were highly controversial, he pushed them through in a bill combined with other tax cuts using the budget reconciliation process, which allowed the bill to be exempt from filibuster by Democrats. But, because of the Byrd Rule, the bill was written to sunset and revert back to the old rates after 10 years, meaning in 2011.

By the way, this budget reconciliation process that Bush used for his tax cuts bill is the same process congressional Democrats have available for them to enact strong health care reform legislation over the objections of Republicans and conservative Democrats. So far, the Democratic leadership is shying away from using it for fear of being too partisan. Instead, they are paring away at central components of the bill in order to win enough support from conservatives to defeat a filibuster.

Pomeroy’s bill to make Bush’s lower 45% rate and higher exemption level permanent is estimated to cost the federal government $234 billion over the next ten years. Unlike most bills in the House that would increase the deficit, the estate tax bill would not have to be offset with new revenue under existing pay/go rules. That’s because the statutory pay/go bill that the House passed this summer included, at the behest of the Blue Dogs, a special exemption for lowering the estate tax.

Needless to say, a lot of liberals in Congress are not happy with Pomeroy’s tax cut, which is specifically targeted at the wealthy. “I feel that it’s a contradiction to vote on a tax break for people worth $3.5 million and above while we’re sending troops overseas without any idea how we’re going to pay for it,” Rep. Raul Grijalva [D, AZ-7], co-chair of the Progressive Caucus, said today. Progressives generally favor an alternative estate tax bill sponsored by Rep. James McDermott [D, WA-7] that would lower the exemption to $2 million per person, adjusted for inflation, with a progressively rising tax rate based on the value of an estate, maxing out at 55 percent for estate valued above $10 million.

The Pomeroy estate tax bill is expected to pass this week, but the Senate, which is tied down with health care form for the foreseeable future, will still have to take it up before it becomes law. When it does move to the Senate, the tax could become even weaker. In April, the Senate voted favorably on an amendment to the budget resolution from Sen. Blanche Lincoln [D, AR] that proposes raising the estate tax exemption to $5 million for individuals and lowering the rate down to 35%.

Like this post? Stay in touch by following us on Twitter, joining us on Facebook, or by Subscribing with RSS.
 

Comments

  • nmeagent 12/07/2009 8:40pm

    “The House of Representatives this week is set to vote on a bill that costs one-third of what health care reform proposals in Congress costs and, unlike the health care bills, is completely unpaid for and would be a direct hole in the federal budget.”

    Good. We need more holes in the federal budget. Maybe with enough gaping holes in their budget they’ll be forced to cut back on various vampiric programs and…I don’t know, leave us the hell alone for a change?

    By the way, returning money that rightfully belongs to someone else is not the same thing as a ‘cost’ and doesn’t need to be ‘paid for’.

  • Spam Comment

Due to the archiving of this blog, comment posting has been disabled.