WASHINGTON - The estate tax is one of many fiscal issues waiting congressional action by the time the ball drops on 2013, and business and farms groups are hopeful a deal can be struck by midnight on December 31.
Without action by Congress, the estate tax rate will increase to 55% from the current 35%, and the $5 million exemption will lower to $1 million. While groups such as the National Federation of Independent Business (NFIB) and the American Farm Bureau would like to see the estate tax go away altogether, that scenario is not likely to pan out.
The Hill writes that GOP lawmakers are pushing to extend the estate tax parameters included in a 2010 deal, which set the maximum tax rate its current 35% with the $5 million exemption, indexed for inflation after 2011. Senate Democrats are hoping to move a tax-plan package €" which could come to the Senate floor for a vote this week €" that would return the estate tax to the 2009 levels of a 45% rate with a $3.5 million exemption, while extending Bush-era rates on family income up to $250,000.
If lawmakers don€™t act by 2013, the estate tax will revert to a level that some independent analyst say would impact many more estates than either the current Democratic or Republican proposals, write the newspaper.
NFIB and the farm bureau are two out of 50 groups that participate in the Family Business Estate Tax Coalition, which wants to see full estate tax repeal. The groups are asking members of Congress to provide businesses with certainty over the tax levels as soon as possible, noting that estate tax planning is expensive and requires a significant amount of time and resources to prepare.
"One thing that we are trying to educate members on is: We don€™t want estate tax to get sort of lost in the shuffle at the end of the year," Matt Turkstra, manager for legislative affairs at NFIB, told The Hill.
Some senators continue to be vocal on this issue, such as Sen. Orrin Hatch (R-Utah), who is calling the estate tax a "deadweight" that stands in the way of economic growth. Sen. John Thune (R-SD) has said that lawmakers from agricultural states are deeply concerned about what could happen if the current estate tax rate increases.
"It€™s possible, I suppose, that when you get to this pileup at the end of the year and you have all this other expiring tax law, that this thing sort of falls by the wayside," Thune told the newspaper, adding, "If we snap back to that level or move backwards in terms of policy, I think it will be very, very harmful to the economy."
Thune is leading a bill that would permanently repeal the estate tax, which as support from many Senate Republicans but not one Democrat. In the House, a similar bill by Rep. Kevin Brady (R-TX) has support from nearly half of the chamber€™s Republicans and a handful of Blue Dog Democrats.
The nonpartisan Tax Policy Center estimated last year that the $3.5 million exemption would ensnare around 7,000 or 7,500 estates in 2013, while the $5 million level would hit around 4,000.