Repeal of the estate tax moved a step closer to enactment with the House voting for permanent elimination of the tax

Modern Machine Shop, June, 2005

Repeal of the estate tax moved a step closer to enactment with the House voting for permanent elimination of the tax. The issue now goes to the Senate, where negotiations have begun on a compromise of a deep and permanent estate tax cut that can pass this year, even if it falls short of full repeal. In voting for permanent repeal, the House rejected a Democratic counteroffer that would have shielded $3.5 million of an estate's value from taxation, enough to exempt 99.7 percent of estates from the inheritance tax. Members approved the measure, strongly supported by the White House. The repeal would take effect in 2010 and disappear in 2011.

The real fight will come in the Senate, where repeal supporters appear short of the 60-vote majority needed to break a promised filibuster by Democrats. GOP leaders are trying to strike a deal to win the 60 votes. President Bush's tax cut in 2001 included a slow phase-out of the estate tax by 2010, but the tax is reinstated in 2011. As these dates approach and concern grows over record budget deficits, some family-owned businesses and affluent heirs are appealing to lawmakers for a deal that would provide estate-planning certainty.