H.R. 4154 (111th): Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009

Introduced:
Nov 19, 2009 (111th Congress, 2009–2010)
Sponsor:
Rep. Earl Pomeroy [D-ND0]
Status:
Died (Passed House)

The bill’s title was written by the bill’s sponsor. H.R. stands for House of Representatives bill.

(About Ads | Advertise Here)
Status

This bill was introduced in a previous session of Congress and was passed by the House on December 3, 2009 but was never passed by the Senate.

Progress
Introduced Nov 19, 2009
Passed House Dec 03, 2009
Votes

Table Appeal of the Ruling of the Chair: H R 4154 Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009
Dec 03, 2009 1:51 p.m.
Passed 234/186

On Motion to Recommit with Instructions: H R 4154 Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009
Dec 03, 2009 2:21 p.m.
Failed 187/233

House Vote on Passage
Dec 03, 2009 2:31 p.m.
Passed 225/200

Cosponsors
11 cosponsors (11D) (show)
Committees

House Ways and Means

The committee chair determines whether a bill will move past the committee stage.

Full Title

To amend the Internal Revenue Code of 1986 to repeal the new carryover basis rules in order to prevent tax increases and the imposition of compliance burdens on many more estates than would benefit from repeal, to retain the estate tax with a $3,500,000 exemption, to reinstitute and update the Pay-As-You-Go requirement of budget neutrality on new tax and mandatory spending legislation, enforced by the threat of annual, automatic sequestration, and for other purposes.

Summary

No summaries available.

Text

Read Bill Text »

Last updated Jan 20, 2010.
44 pages

Primary Source

View on THOMAS (The Library of Congress)

GovTrack gets most information from THOMAS, which is updated generally one day after events occur. Activity since the last update may not be reflected here.

Citation

Click a format for a citation suggestion:

GovTrack’s Bill Summary

We don’t have a summary available yet.

Library of Congress Summary

The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress.

12/3/2009--Passed House amended.
Division A - Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009
Permanent Estate Tax Relief For Families, Farmers, and Small Businesses Act of 2009 -
Section 2 -
Repeals provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) eliminating the tax on estates and generation-skipping transfers and the step-up in basis provisions for property acquired from a decedent for estates of decedents dying after 2009 (thus retaining estate and gift tax provisions in effect in 2009). Declares that the sunset provision (general termination date of December 10, 2010) of EGTRRA shall not apply to the estate and gift tax provisions of that Act (thus preventing a reversion to estate and gift tax provisions in effect prior to its enactment).
Section 3 -
Amends the Internal Revenue Code to establish a permanent $3.5 million exclusion amount and a maximum tax rate of 45% for decedents dying, and gifts made, after December 31, 2009.
Division B - Statutory Pay-As-You-Go Act of 2009
Statutory Pay-As-You-Go Act of 2009 -
Section 104 -
Requires a Pay-As-You-Go (PAYGO) Act to include by reference an estimate of its budgetary effects as determined by the Congressional Budget Act of 1974 (CBA), if timely submitted for printing in the Congressional Record by the chairs of the congressional budget committees (chairs) before the vote on it. Requires: (1) the Clerk of the House of Representatives or the Secretary of the Senate, as applicable, also to incorporate by reference such printed estimate into the enrollment of a PAYGO Act; and (2) budgetary effects that are not so included to be determined by the Office of Management and Budget (OMB) estimates. Amends the CBA to require the chairs to request from the Director of the Congressional Budget Office (CBO) an estimate of the budgetary effects of a PAYGO Act before a vote in either chamber on it that, if determined in the affirmative, would clear it for enrollment. Directs the chairs to post such estimate on their respective committee websites and cause it to be printed in the Congressional Record under "PAYGO ESTIMATE." Requires CBO to make specified estimate adjustments when calculating budgetary effects of certain designated legislation affecting current policy, as detailed in section 7 of this Act. Requires OMB to maintain and make publicly available a continuously updated document containing two PAYGO scorecards (the first for a 5-year period and the second for a 10-year period for the beginning of each respective budget year) displaying the budgetary effects of PAYGO legislation, applying certain look-back and averaging requirements. Requires OMB to display as a separate addendum the cost estimates of provisions designated in statute as emergency requirements.
Section 105 -
Requires OMB to: (1) make an annual public PAYGO report, including a up-to-date document containing the PAYGO scorecards, within 14 business days after Congress adjourns to end a session; and (2) prepare for the President an offsetting sequestration order, which the President shall issue if such report shows a debit on either PAYGO scorecard for the budget year.
Section 106 -
Prescribes requirements for calculating a sequestration for nonexempt direct spending programs, including Medicare payments and certain nonexempt mandatory programs.
Section 107 -
Prescribes requirements for CBO adjustments of estimates of budgetary effects of PAYGO legislation for legislation affecting current policy for: (1) payments made under title XVIII (Medicare) of the Social Security Act for physician services; (2) the Estate and Gift Tax under the Internal Revenue Code; and (3) the permanent extension of middle-class tax cuts and the Alternative Minimum Tax (AMT) relief under EGTRRA or the Jobs and Growth Tax Relief and Reconciliation Act of 2003.
Section 108 -
Applies to this Act certain sequestration order requirements of the Balanced Budget and Emergency Deficit Control Act of 1985 (Gramm-Rudman-Hollings Act), as amended by this Act, including the authority of Members of Congress and certain individuals to request an expedited judicial review of a sequestration order.
Section 109 -
Makes technical and conforming amendments to the Gramm-Rudman-Hollings Act.
Section 110 -
Exempts from sequestration: (1) low-income subsidies and catastrophic subsidies under Part D (Voluntary Prescription Drug Benefit Program) of the Social Security Act (SSA); and (2) qualified individual (QI) premiums for Medicare cost-sharing for certain dual eligible low-income Medicare beneficiaries under SSA title XIX (Medicaid).
Section 111 -
Amends the Gramm-Rudman-Hollings Act to specify additional Social Security, veterans, Tier I Railroad Retirement benefits and other programs and activities exempt from a sequestration order as well as certain economic recovery programs.

House Republican Conference Summary

The summary below was written by the House Republican Conference, which is the caucus of Republicans in the House of Representatives.

This summary can be found at http://www.gop.gov/bill/111/1/hr4154.

Background

In 2001, Congress passed the Economic Growth and Tax Relief Reconciliation Act (EGTRRA), which included a phase out of the death tax by increasing the exemption level and reducing the tax rate.  The current exemption is $3.5 million and the rate is 45 percent-the same level that would be permanently extended by H.R. 4154.  Under current law, the tax is set to expire on January 1, 2010, and then come back in 2011, with an exemption of $1 million and a rate of 55 percent.  According to reports, H.R. 4154 would reduce revenues by $234 billion over the next ten years by raising the exemption and lowering the tax rate scheduled to take effect under current law.

Many Members have long-supported a complete repeal of the death tax because it taxes individuals at their death and, in effect, is double tax on assets that were already subject to regular income taxes.  In addition, the tax disproportionally affects the assets of small businesses and farms that are transferred at the time of death.  Given the current economic crisis, many Members agree that now is a particularly inopportune time to raise taxes in the short term by not allowing the death tax to expire under current law.  Since passage of the Democrats' trillion dollar "stimulus," more than 2.8 million jobs have been lost and unemployment stands at a 26-year high.

According to a study by Douglas Holtz-Eakin, former Director of Congressional Budget Office (CBO), eliminating the death tax could have dramatic positive effects on the economy and spur job creation.   According to the analysis, a repeal of the tax could have the following results:

 

•  Increase small business capital by over $1.6 trillion.

•  Increase the probability of hiring by 8.6 percent.

•  Increase payrolls by 2.6 percent.

•  Expand investment by 3 percent.

•  Create 1.5 million additional small business jobs

•  Reduce the current jobless rate by .9 percent.

Eliminating the tax would increase the incentive to raise and expend capital because it directly punishes wealth accumulation and transfer.  Thus, repealing the tax would have an impact on both existing small businesses and farms that generate wealth and those who receive wealth in a transaction after death.   According to the Small Business Administration (SBA), small businesses and firms employ more than half of all U.S. workers.

In addition to the negative effects on U.S. employers during a job crisis, another concern with H.R. 4154 is that the exemption rate is not indexed to increase with inflation.  As inflation occurs over time, more and more individuals and businesses will be subject to the tax, which according to its proponents is meant to only impact the wealthiest Americans.  Similar to how the Alternative Minimum Tax (AMT) was designed to hit less than 200 individuals and now is regularly skirted by Congress because it would affect two-thirds of taxpayers earning between $50,000 and $100,000, would allow more Americans to pay the tax than Congress now intends.

 

Summary

H.R. 4154 would permanently extend the estate tax on assets transferred following a death at the current level.   The legislation would exclude amounts up to $3.5 million and permanently set the tax, commonly referred to as the "death tax," rate at 45 percent.  Under current law, the death tax is set to expire in 2010 and then go back into effect in 2011.  In addition, H.R. 4154 would not index the exemption rate to inflation. 

In addition, the rule attach the text of H.R. 2920, the Statutory Pay-As-You-Go Act of 2009, which passed the House on July 22, 2009, by a vote of 265-166, to the underlying legislation.   According to press reports, the additional legislation would be added to the bill in order to appease certain Democrats who are concerned the Death tax extension would increase the deficit by an estimated $234 billion over ten years.  A full summary of the PAYGO provisions and additional information is available at the Conference website.

 

Cost

A formal CBO score of H.R. 4154 was not yet available as of press time. However, press reports indicate that the legislation would result in a deficit increase of $234 billion over ten years, which would likely not be offset with other revenue increases.

House Democratic Caucus Summary

The House Democratic Caucus does not provide summaries of bills.

So, yes, we display the House Republican Conference’s summaries when available even if we do not have a Democratic summary available. That’s because we feel it is better to give you as much information as possible, even if we cannot provide every viewpoint.

We’ll be looking for a source of summaries from the other side in the meanwhile.

The bill contains the following citations to other parts of U.S. law:

Slip Laws

Slip laws refer to enacted bills and joint resolutions in their original form as enacted by Congress, that is, before other laws amend them. Slip laws are cited as “Public Law XXX-YYY”, where XXX is the number of the Congress in which the bill or resolution was introduced.

United States Code

The United States Code is the compilation of permanent laws enacted by Congress. Temporary and other non-permanent laws do not appear in the United States Code. (About half of the United States Code is the law itself, called positive law. The other half is merely a compilation of the laws but has no legal significance.)