Max Baucus Clears Way for Death Tax Repeal

Curtis Dubay / September 16, 2010

The federal estate tax , better known as the death tax, was eliminated this year after a decade-long phase-out. Nothing in Washington is permanent, however, and due to a quirk in budget law, it comes roaring back to life in 2011 (less than four months from now) at a 55 percent rate and only $1 million exemption—its levels prior to the phase-out—unless Congress acts before the end of the year.

There have been sporadic efforts in the Senate this year to address this impending massive tax hike that will threaten the existence of family-owned businesses if it takes effect. None have succeeded. The failures are in some part due to pay-as-you-go (or PAYGO) budget rules that require Senators to “offset” the foregone revenue of keeping the death tax at any rate below 55 percent with spending cuts or tax hikes. This includes permanently continuing the death tax at its levels in 2009 prior to its expiration (45 percent and a $3.5 million exemption), which is President Obama’s plan. (more…)