The tax cut extension package that Senate Majority Leader Harry Reid (D-NV) brought up for a vote today did not include an Obama administration proposal to reset the estate tax to the 2009 level. Senate Republicans, along with a handful of Senate Democrats — including Sens. Mark Pryor (D-AR), Mary Landrieu (D-LA), and Kay Hagan (D-NC) — balked at including the measure.
The Obama administration’s estate tax parameters already kept all but the nation’s very wealthiest estates from owing any tax at all. In fact, by refusing the increase, the Senate will spend $119 billion, to preserve tax breaks for just 3,200 estates:
This year, the per-person exemption is $5.12 million and the top rate is 35 percent. Obama agreed to those parameters as part of a December 2010 deal with Senate Republicans that also extended expiring tax cuts and created a payroll tax cut.
Under those numbers, which Republicans want to extend, 3,600 estates would pay taxes, or fewer than 0.2 percent of estates, according the nonpartisan Joint Committee on Taxation.
Obama proposed a $3.5 million per-person exemption and a 45 percent top rate, returning to parameters that were in effect in 2009. That would require 7,200 estates, or about 0.3 percent, to pay taxes.
Even under the Obama administration’s proposal, just 0.3 percent of estates would be subject to the estate tax, all of them with estates larger than $3.5 million. Those estates that do owe tax will receive a $1.1 million tax break if the administration’s proposal is not adopted and the estate tax stays at its current level.
Meanwhile, the tax plan released by Senate Republicans would raise taxes on 20 million working families.
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