The status of the estate tax repeal has not changed, but action is likely before this congressional session ends.

The $1.3 trillion tax cut package passed in June 2001 bill included a one-year repeal of the estate tax effective in 2010, with gradually increasing exemption levels and decreasing tax percentage rates until then. In 2011, the estate tax will revert back to the law that was in effect in 2001.

Permanent repeal of the estate tax is something of a conservative fixation, making it likely that efforts will be made to accelerate the repeal, to extend the repeal, to make the repeal permanent, or possibly to "reform" the estate tax by making the exemption levels so high and the tax rate so low as to render it repealed in all but name. However, the failure of Congress to pass a budget resolution; the tight budget situation and the cost of repeal; and the expiration in 2004 of the so-called "middle-class" tax cuts, all mitigate against the possibility of estate tax repeal anytime soon.

It is unclear how the deadlock over the estate tax will be broken -- especially in the near future. There appears to be broad congressional support for extending the so-called "middle-class" tax cuts that are due to expire in 2004, in spite of the rising deficits. However, even those tax cuts may require offsets since the proposed PayGo rules that would have exempted tax cuts from the offset requirement have been defeated so far. The failure of Congress to pass a budget resolution means that there are no reconciled funds available for any tax cuts during 2004, including repeal of the estate tax.

Future plans are uncertain, but there likely will be one more vote in the Senate on a measure to repeal or reform (in a manner not yet determined) the estate tax, essentially to send a message to voters before the election. For more information and updates see the Americans for a Fair Estate Tax coalition website.

United for a Fair Economy has launched a campaign to have business owners sign on to a statement in support of the estate tax. UFE would welcome efforts to increase the number of signers.