Friday, Dec. 4
Posted 4 p.m. EDT
Mommas can rest easier. With House passage of a bill to continue collecting the estate tax, it looks like there's little danger folks will be throwing their mothers from trains in 2010.
That was the cynical joke among Washington watchers when, as part of the Bush administration tax cuts, the estate tax was phased out. Currently, the tax is collected at a 45 percent rate on the amount of estates that exceed $3.5 million. The tax was scheduled to disappear completely next year, hence the "Throw momma from the train" refrain.
No one really expected that to happen. In fact, the top staff assistant at the Ways and Means Committee has said that the writers of the estate tax repeal essentially guaranteed that it wouldn't happen.
The reason, noted Ways and Means Chief Counsel John Buckley is that because of current law basis adjustments, more heirs would be hurt by no estate tax than would have to pay under the current system.
The House agreed, so representatives voted to keep the current rate and estate value exemption in place permanently.
Of course, "permanent" doesn't necessarily mean what you, I or Merriam-Webster thinks it means. And the Senate, which also must take action before any estate tax law is a done deal, is less inclined to set the law in even ostensible stone.
Still, expect the Senate to take up the estate tax before the end of the year. Then a House-Senate conference committee will come up with a compromise measure that will at least keep the tax in place through 2010.
And be sure to give your mom a big hug and let her know that regardless of the size of her estate, 2010 is going to be a good year!
Read more tax blogs.