House Passes Bill to Make Permanent 2009 Estate Tax

The U.S. House of Representatives Thursday passed 225 to 200 votes H.R. 4154, the Permanent Estate Tax Relief for Families, Farmers, and Smalls Businesses Act of 2009, which would make permanent the 2009 estate tax rate of 45 percent and tax exemption levels of $3.5 million for singles and $7 million for couples.  Without Congressional action, the estate tax is scheduled to drop to zero in 2010, only to be reinstated at a higher 55 percent tax rate and $1 million exemption in 2011.  AGC has focused on full permanent repeal of the estate tax as the best option to ensure that construction companies are able to stay in business after the death of an owner.  At the same time, AGC has also advocated for reasonable, permanent reform at the lowest possible rate and highest possible exemption levels.  In addition, AGC has advocated for indexing of the exemption levels for inflation, as well as reinstating the step-up in basis repealed for estates in 2010.  H.R. 4154 would only address two of AGC's five objectives for estate tax reform: permanency and step-up in basis, so AGC will continue to work to have those issues addressed in the Senate. The bill now moves to the Senate where lawmakers there are in the midst of what is expected to be several weeks of debate on health care reform.  It is uncertain whether the Senate will be able to take a break from health care to take up estate tax by the end of the year.  An amendment is expected to be offered in the Senate that would reduce the top estate tax rate to 35 percent and increase the exemption levels to $5 million for singles and $10 million for couples.  The amendment would also index the exemption levels for inflation and reinstate step-up in basis.  The Senate passed a similar amendment AGC supported during consideration of the Senate's non-binding budget resolution earlier this year.  Sponsors of the amendment are considering how to offset the greater cost of the additional estate tax relief, and are weighing whether they will need to phase in the rates over a 10-year period.  For more information, contact Karen Lapsevic at (202) 547-4733 or lapsevick@agc.org.