Estate Tax Faces Its Own Life-and-Death Struggle

Parties Are at Odds on How to Deal With a Levy Set to Disappear Entirely in 2010 Before Being Resurrected at Full Pre-Bush Level

By JONATHAN WEISMAN
WSJ

WASHINGTON -- President Barack Obama and congressional Democrats are united behind an effort to block a scheduled year-end repeal of the estate tax. But prospects are blurred by divisions between the House and Senate over the contours of a restored tax, as well as Capitol Hill's focus on health care.

"Health care has become such a consuming passion, this has dropped to the second tier," a senior Democratic tax aide said about keeping the estate tax in place. "But it has to be done."

President George W. Bush's 10-year, $1.35 trillion across-the-board tax cut, passed in 2001, included a slow-but-steady reduction of the levy on heirs that critics branded "the death tax." Under the law, the value of an inheritance shielded from taxation increased from $1 million to $3.5 million in 2009. The tax rate on inheritances larger than that slowly decreased from 55% to 45%. Then, in 2010, the entire estate levy was to disappear.

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