Sens. Carper & Voinovich Introduce Bill to Fix Estate Tax
Senators' Bipartisan Bill Is More Fair to Taxpayers and More Fiscally Responsible
WASHINGTON – Sens. Tom Carper (D-Del.) and George Voinovich (R-Ohio) today introduced bipartisan legislation to exempt more families, farms and small businesses from the estate tax burden, while still being fiscally responsible.
Under current law, the estate tax is being phased out and will be fully repealed in 2010. However, just one year later, in 2011, the estate tax will be reinstated at its original rate of 55 percent for singles with estates worth more than $1 million.
“We can’t just let the estate tax go back into effect, but as long as we are running huge budget deficits we can’t afford a full repeal of the tax either,” said Sen. Carper. “I believe we have reached a good, bipartisan middle ground where we can fix the estate tax and make it fairer for families, farms and small businesses, while costing our Treasury far less than a full repeal of the estate tax.”
“Our proposal will give taxpayers the certainty in the law they need in order to plan for the future and make the right decisions for their families, small businesses and other commitments,” Sen. Voinovich said. “It is an excellent alternative to the fiscally irresponsible full repeal the estate tax, which would cost $670 billion from 2008 to 2018. We simply cannot afford to move even deeper into the red when we must fund the war, secure the homeland and when we know the tidal wave of entitlements are coming due.”
To make this estate tax bill fiscally responsible, it includes a Sense of the Senate resolution that calls for the cost of the Carper-Voinovich bill to be completely offset, consistent with Congress’s commitment to pay-as-you-go rules.
The legislation introduced today would freeze the estate tax at its projected 2009 levels so any estate valued at more than $3.5 million per individual or $7 million per couple will be taxed at a 45 percent rate. That level will remain constant, while being adjusted upward with inflation.
In recent years, several legislators have introduced bills that would permanently repeal the estate tax. However, these proposals have been rejected by many senators, including Sens. Carper and Voinovich, who have said a complete repeal of the federal estate tax is too expensive given our severe budget deficit. Instead, Sens. Carper and Voinovich have urged leaders to find a middle-ground on the issue.
“I believe our bipartisan approach to fixing the estate tax problem is a fair way of handling the issue and would cost roughly three-fifths as much as legislation making the repeal permanent,” Sen. Carper said. “Rather than giving up on finding a solution to the estate tax dilemma, I hope other senators will see our proposal as an acceptable middle ground.”
Under the Carper-Voinovich legislation, only two estates out of every 1,000 would be subject to the estate tax. That amounts to just 11,000 estates by 2012, compared to a much larger 50,000 estates that were being taxed back in 2001 when the tax started being phased out.
Sen. Patrick Leahy (D-Vt.) is also an original co-sponsor of this legislation.