With Democratic leadership and Republicans blaming each other, it looks like negotiations to roll back the currently repealed federal estate tax to 2009 levels when it kicks back in next year have been stalled-and the fall elections are approaching.
A staffer in Finance Committee chairman (D) Max Baucus’ office said that “Republican objections” had stalemated recent progress toward estate tax clarity.
Since the deal would have given Republicans just about everything they’ve asked for, including a $5 million exemption (rising with inflation) and a 35% maximum rate, those objections may be more about Senate procedure and the political situation than the tax code.
From the Republican camp, John Kyl of Arizona, Senate minority whip, threw the blame back across the aisle. “We no longer have an agreement,” he told reporters, “because the Democratic side has decided that unless a matter has a guaranteed majority of Democratic votes going in, they’re not going to allow it on the floor.”
The Will Doctor is unsure who is to blame for this fiasco, and I dont think it matters who is responsible. The facts are that we are now confronting a significant tax increase in 2011. It is still possible (not sure how likely) that the drastic ten year old tax regime slated for next year may be repealed or revised during 2011. The constitutional grounds for retroactively extending the 2009 regime or something similar (above) to prevent the application of the one year repeal under which we are now operating, in 2011 are uncertain. Accordingly, we have an increased likelihood that a one year repeal may stay in the law-and we are developing plans to act accordingly for the benefit of our clients.