Last week, the House of Representatives voted to permanently extend the 45 percent inheritance tax on estates worth more than $3.5 million, which was set to expire at the end of the year.
In order for the bill to be enacted, the Senate will need to pass its own version by December 31. If they do not, the tax will be nonexistent for 2010 and will then revert back to pre-Bush-era rates where the first $1 million would be exempted and anything over that would be taxed at a rate of 55 percent.
"This bill gives our nation’s wealthiest families the ability to know exactly what their obligation to the nation that fostered their wealth will be, and it is fair and it is just," said Democratic Representative Jared Polis of Colorado, quoted by the Associated Press (AP).
Many Republicans have been calling for a permanent repeal of the estate tax, arguing that it hurts families who pass down small businesses to future generations.
"In a small business at normal rates of return, you can roughly double the business every generation, but then the government comes and takes half of it away from you," said Steve Entin, director of the Institute for Research on the Economics of Taxation, quoted by Fox News. "It knocks you back to where you started, and they do this generation after generation," he added.
There is concern among supporters of the legislation that the Senate will not pass their own version of the bill by year’s end due to its preoccupation with the healthcare bill and the redeployment of troops to Afghanistan.