CHN: Congress Delays Action On Taxes
Despite mounting pressure from the business community to pass a package of tax extenders that includes the research and development tax credit as well the college tuition and state and local tax deductions, Congress recessed for elections without action on tax legislation. Senate Democrats made several unsuccessful attempts to pass a clean tax extenders bill which has bi-partisan support in Congress, but Republican leaders are holding out the hope that they will be able to shove through a bill that includes gutting the estate tax in the lame duck session.
The so-called ‘trifecta’ bill that linked the package of extenders with an increase in the minimum wage and a drastic reduction in the estate tax failed in the Senate in August. Prospects for passing a similar measure after the election remain problematic, but no one should rule out the possibility that proponents of repeal would try again with what they hope is an irresistible package. Pressure to extend the corporate and other tax breaks separately is likely to grow.
Under current law the estate tax exemption, presently at $2 million, will increase to $3.5 million in 2009 and the highest marginal rate will decrease from 46 to 45 percent. Unless Congress acts, the estate tax cut will expire and in 2011 the exemption will revert back to $1 million, the level it was in 2001, and the highest marginal rate will return to 55 percent.