Senate Democrats Drop Estate Tax Proposal

As I have previously discussed, the Senate Democrats are in the process of dropping the estate tax provision of the President Obama’s Tax Bill. Finally, the Democrats have removed that provision from the tax bill, which means that if the Republican’s proposal to extend to the Bush-era tax cuts fails in Congress, the estate tax exemption will be reduced to $1 million and the tax rate for income in excess of $1 million will be taxed at 55%. 

This is not the first time that Congress has come to a stand still over the estate tax. In fact, it is quite common to even have dissent and disagreement among fellow party members. For example, Democratic Senator Blanche Lincoln wanted to raise the estate tax, the last time that the estate tax was before Congress, against the wishes of many in her party. Now, the Senator who defeated Lincoln in the last election wants to completely eliminate the estate tax. 

This does not mean that the Democrats in the Senate will not offer any alternative to the Republican’s proposal. Some anticipate that if the Democrats were to bring a solution before the Senate, they might try to extend the Bush-era tax cuts but only for citizens who make less than $250,000 a year.

See Niels Lesniewski & Daniel Newhauser, Democrats Leave Out Estate Tax, Roll Call, July 24, 2012.

Special Thanks to Brian J. Cohan for bringing this article to my attention.