Legislation has been introduced into the US House of Representatives that would reduce the number of Americans subject to the estate tax. The legislation, introduced by Rep. Bill Thomas (R-Calif.), will raise the pre-person threshold for the estate tax. The Permanent Estate Tax Relief Act of 2006 would give individuals greater flexibility in making estate decisions during life, said Thomas. It will reunify the estate, gift and generation-skipping transfer taxes. The included proposals would increase the exemption amount to $5 million per person starting January 1, 2010. The rate of tax on estates up to $25 million would be reduced to the capital gains tax rate. The capital gains rate is currently at 15 %, but is set to increase to 20% in 2011. Estates over the $25 million mark would pay twice the prevailing capital gains tax rate. The bill would simplify estate tax planning by allowing married couples to take full advantage of the $5 million exemption. They would be able to carry over any unused exemption from the surviving spouse. The legislation also includes a 60% deduction for qualified timber capital gains. The estate tax rate is being gradually reduced due to 2001 tax legislation. However, it is set to be reinstated at the rate of 55% in 2011. The Senate recently rejected a motion to debate a full repeal of the tax. Senate Majority leader Bill Frist has said he is willing to reach a swift and permanent compromise that would win the necessary 60 Senate votes. The House is expected to take up the legislation this week. This could allow the Senate the ability to vote on the proposals before breaking for summer recess. |
