WASHINGTON — As part of the compromise reached between President Obama and Republican leaders in Congress that would extend the Bush-era tax cuts for another two years, the estate tax would return in 2011 at a 35% rate and a $5 million exemption, according to reports.
The estate tax — a levy on inherited wealth that is of concern to many family-owned supermarket operators — expired at the end of last year but was slated to return at a 55% rate in 2011 with a $1 million exemption.
The overall tax agreement also could include additional tax breaks for businesses, such as a proposal for companies to write off 100% of their investments in plants and equipment in 2011, according to a report in the Wall Street Journal.
The proposal has yet to pass through Congress, where many Democrats oppose elements of it that are beneficial to wealthy individuals.
"Extending the cuts on a temporary basis is a prudent move that will allow our economy to regain stability while policymakers seek to settle that question," said Matthew Shay, president and chief executive officer, National Retail Federation. "Many of the 'wealthy' taxpayers who will benefit from this agreement are small-business owners whose business income is taxed as personal income and who are working every day to create jobs."
"The President's proposal to extend the estate tax for two years at a favorable 35% rate with a $5 million exemption is a good start," said Peter J. Larkin, president and CEO, National Grocers Association. "While NGA's members will continue to advocate for full repeal of this onerous tax, we are committed to working with Congress to pass this temporary measure to provide relief and certainty to thousands of family-owned businesses, which will be devastated should the estate tax return to pre-2001 levels."
Leslie G. Sarasin, president and CEO of FMI, also called on Congress to pass the tax legislation: “We applaud the bi-partisan agreement reached by the White House and Congressional leaders, which provides a solid framework that will benefit families and small businesses of all income levels, especially during these difficult economic times. The proposed package will also provide certainty to companies facing important operating decisions for the coming year.”
