WASHINGTON - The House voted yesterday to extend a 45 percent inheritance tax on estates larger than $3.5 million indefinitely, canceling a one-year repeal of the tax set to begin next month.
A similar effort is afoot in the Senate, but the health care debate there could preclude action before Congress breaks later this month for the holidays, and there are also disagreements among senators over the tax rate and the size of estates that should be exempt. Lawmakers, however, don’t want to delay action until next year because they are wary of enacting retroactive tax changes.
Under the House bill, estates smaller than $3.5 million would continue to be exempt from the tax. Married couples, with a little estate planning, could exempt a total of $7 million. That leaves less than 1 percent of all estates subject to the tax.
The bill passed by a 225-to-200 vote, with all Republicans opposed. Majority Democrats said a permanent tax rate makes it easier for families and small-business owners to do estate planning. The bill follows the federal budget proposed by President Obama, but many Republicans called for permanent repeal of the tax, saying it hurts families that pass down small businesses to their children.