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Senate looks to be best bet for estate tax fix

December 2, 2009

An estate tax bill will go to a vote Thursday or Friday in the U.S. House, but Farm Bureau will not be taking a position on it.

H.R. 4154, a bill sponsored by North Dakota Democrat Earl Pomeroy, would make permanent this year’s estate tax exemption of $3.5 million and maintain the current tax rate of 45 percent.

Instead, we continue to support H.R. 3905, a bill that would gradually increase the exemption to $5 million and lower the tax rate to 35 percent over the next decade.   And unlike the Pomeroy bill, H.R. 3905 indexes its exemption to the rate of inflation after 10 years.   However, AFBF was told the Rules Committee will likely not permit a vote on 3905.

IFB’s letter to our Congressional delegation urges support for a higher exemption, a  lower tax rate, and most importantly, permitting the exemption to grow annually at the rate of inflation.

While increases in land values have flatted somewhat, the average acre of Illinois farmland has doubled in value since 2000.

National Journal’s Congress Daily reported Tuesday that there’s support building in the Senate for indexing the estate tax exemption.

Senate Budget Committee chair Kent Conrad and Finance Committee chair Max Baucus support an inflation-adjusted exemption.

“I think there will be an attempt to deal with that before the year is out,” Conrad said. “We should have $3.5 million per person indexed for inflation. We shouldn’t go to zero next year and then go back to a $1 million exemption. That truly makes no sense.”

Baucus said it was his preference to extend the 2009 estate tax permanently, with the $3.5 million threshold indexed for inflation.  Baucus introduced a broad tax cut bill earlier this year that includes a permanent, indexed estate tax at the 2009 levels, and last month Sens. Thomas Carper, D-Del., and George Voinovich, R-Ohio, introduced a bipartisan stand-alone bill to do the same.

On top of an inflation-adjusted estate tax, Senators also seem more likely to bump up the exemption to $5 million per spouse.

Senate Agriculture Chairwoman Blanche Lincoln and Senate Minority Whip Kyl are pushing a more generous measure that would cut the rate to 35 percent and boost the exemption to $5 million per spouse. That measure has the potential to pick up several moderate votes as well as nearly all Republicans, if Senate leaders allow a vote.

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