House Votes To Repeal US Estate Tax

by Mike Godfrey, Tax-News.com, Washington

15 April 2005

Forty-two Democrats joined Republicans on Wednesday as the House of Representatives voted to permanently abolish estate tax.

The measure was approved in a 272-162 vote and now moves up to the Senate, where there is also support for a permanent eradication of the tax, but to a lesser extent.

By approving the measure, the House rejected an alternative proposal advanced by Rep. Earl Pomeroy (D-North Dakota), under which estates valued at less than $3.5 million for individuals and $7 million for couples would have been exempted from estate tax.

Pomeroy argued that this compromise would have put more than 99% of estates out of the tax net.

Currently, the estate tax threshold is $1.5 million, which is set to rise to $3.5 million (and $7 million for couples) in 2009 under tax cuts passed in 2001. Meanwhile, rates are set to decline to 45% in 2009 before being repealed for one year.

Discussions are reportedly under way in the Senate on a compromise that would permanently increase the level of exemption from the tax and lower the rate of tax.

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