As you’ve probably read, Congress has adopted a final budget resolution, which resolves differences between the versions the House and Senate earlier passed. The estate tax cuts in the Senate version didn’t survive the negotiations.
The resolution instead would lock in the current estate tax exemption–a hefty $7 million for a couple. The exemption would be indexed for inflation. So the exempt amount, though not its real value, would increase annually.
This is good news for those of us who would like to see tax benefits focused on low-income workers and revenues available for programs that serve their needs. But it’s not quite the end of the story.
After all, the budget resolution isn’t the budget. It’s just a framework for the separate spending and tax bills that the House and Senate committees will develop in months to come, plus instructions for certain legislative changes. So we’re bound to hear more about endangered small businesses in months to come.
But advocates of a further estate tax rollback will have a tough time–at least in the House–because even the extension in the budget resolution will have to be “paid for” by spending cuts or tax increases.
It’s doubtful the House Democratic majority will try to pay for a tax cut that would benefit only the very wealthiest families when the alternative could be extending the recent tax cut for workers–or, for that matter, several due-to-expire benefits for middle-income taxpayers.
But the Senate isn’t committed to the pay-as-you-go principle, i.e., the need to offset tax cuts and new spending so that they don’t increase the deficit. A critical mass of Senate Democrats bought into the estate tax giveaway once. They just might do it again.