Federal Legislative Watch

Sen. Kyl Proposes 35% Estate Tax Rate

Under current law, the estate tax exemption will increase to $3.5 million in 2009, the estate tax will be repealed in 2010 and the tax will be reinstated in 2011. The 2011 estate exemption will be $1 million per person with a 55% top estate tax rate.

There is widespread agreement in Congress that a compromise must be found prior to the repeal of estate taxes in 2010 and reinstatement of a very high estate tax rate in 2011. Sen. Max Baucus (D-MT) and Sen. Jon Kyl (R-AZ) have been negotiating for their respective parties for a period of two years, but have been unable to come to agreement.

Sen. Kyl recently introduced a motion to instruct the Senate Conferees on the Budget Resolution for 2008 with respect to estate taxes. Sen. Kyl requested "legislation to provide for permanent death tax relief, with a top marginal rate of no higher than 35%, a lower rate for smaller estates and a meaningful exemption.

Editor's Note: The trend of the estate tax negotiations has been clearly toward the position of Sen. Baucus. Sen. Kyl now appears to be willing to accept a 35 percent tax bracket. While negotiations are still underway, the likely estate tax compromise numbers are drawing closer. A freeze of the estate exemption at $3.5 million in 2009 and an estate tax rate between 35 percent and the current 45 percent now are quite probable.

For more information about the SouthWestern Association's lobbying activities, contact Jeff Flora.