Estate Tax Reform Sought
The Senate Finance Committee held a hearing on alternatives to the estate tax. The estate tax, commonly referred to as the death tax, has been gradually reduced since 2001 and will be completely eliminated in 2010. Because of budget rules, the 2001 level of the tax will come back in 2011 unless Congress acts.
Finance Committee Chairman Max Baucus (D-MT) is holding a series of hearings to discuss possible alternatives. During one hearing, the committee discussed an inheritance tax as an alternative. It would be levied against the beneficiaries of an estate instead of the estate itself.
Senators Jim Bunning (R-KY) and Blanche Lincoln (D-AK) were especially concerned about the effect of such taxes on family businesses. While proponents of the inheritance tax stated that such a plan would try to keep businesses from being sold to pay such taxes, their plan—which calls for deferral of taxes—would still severely limit how beneficiaries could manage the businesses they would inherit.
Baucus stated his intention to draft a bipartisan bill to reform estate taxes before the end of this year.