Edwards Votes for Estate Tax Relief Act As Bill Passes House

WASHINGTON, DC – U.S. Representative Chet Edwards voted for HR 5638, the Permanent Estate Tax Relief Act, which passed the U.S. House. The bill would permanently repeal the estate tax for estates worth up to $5 million for individuals and $10 million for married couples. HR 5638 is an attempt to compromise with the Senate, which has consistently opposed full repeal of the estate tax. “Small businesses and farms, which are responsible for 3 out of 4 new jobs created in our country, should not have to be carved up or sold just to pay the death tax,” said Edwards. “This bill will ensure that over 99% of Americans do not have to pay any inheritance taxes and will help protect well-run family businesses and farms.”

Under the bill, if passed by the Senate, estates worth up to $5 million for individuals and $10 million for married couples would be exempt from the estate tax. Estates worth up to $25 million would pay capital gains taxes on assets above the $5 million exemption for individuals and $10 million for couples. That tax rate is presently 15% and is scheduled to go to 20% in 2011. For estates of more than $25 million, the estate tax would be double the capital gains tax rate. The new bill would be effective starting January 1, 2010.

Edwards also voted for an amendment that would have made the effective starting date of a permanent repeal for estates valued up to $6 million January 1, 2007 rather than January 1, 2010, but the amendment did not pass.

“Reducing the estate tax on small businesses and family farms is a good idea that shouldn’t have to wait until 2010 to be implemented. The three and a half year delay means families and small businesses will have to continue to buy expensive, unnecessary insurance to cover possible deaths between now and 2010. I would rather have that money going into growing family businesses and creating new jobs,” observed Edwards.

The new bill would replace present law, which was passed in 2001. That law allows the federal estate tax to gradually decline until 2010, at which time it would be completely repealed, but only for one year. In 2011, the estate tax under present law is scheduled to revert to its previous level of a maximum tax rate of 55% on estates valued at more than $1 million.

“It is absurd to have a law that says if you die in 2010, your heirs pay no estate tax but if you die one minute after 2010, you have to pay a 55% tax rate. That prohibits families from doing any effective estate planning,” said Edwards.