In their opening statements [at the Nov. 14 Senate Finance Committee's Estate Tax Hearing], both Sens. Max Baucus (D-MT) and Charles Grassley (R-IA) expressed their personal support for estate tax repeal, but Baucus went on to acknowledge repeal is not part of the discussion any more in the Senate. Most outside observers rule out estate tax repeal as well. Mark Bloomfield, president of the American Council for Capital Formation, who has lobbied for repeal, told Bloomberg News, "I don't think complete repeal has the votes, has not had the votes for a few years and won't have the votes in the future."
While no legislative action is expected on the estate tax for the rest of the year, Baucus said he plans to introduce a bill reforming the tax for markup sometime this spring. It will be interesting to see what Baucus proposes, if anything, in view of the deep divide within the Senate on the issue. In 2006, the Senate rejected GOP proposals to end the estate tax as well as an amendment by Sen. Jon Kyl (R-AZ) to reduce the estate tax rate to 15%. At the same time, a Democratic proposal to bring the rate down to 30% was also rejected.
My prediction is that the estate tax will be frozen at 2009 levels (a 45% tax rate and $3,500,000 per person exclusion from taxation). The 2010 elimination of the estate tax, and the 2011 return of the estate tax with 55%+ top rates and a $1,000,000 exclusion are both unlikely to materialize.
In 2007 and 2008, we have a 45% tax rate and a $2,000,000 per person exclusion.