Two senators propose reinstating estate tax

WASHINGTON Wed Jul 14, 2010 11:35am EDT

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WASHINGTON (Reuters) - Two senators, a Democrat and a Republican, have reintroduced a proposal to reinstate the estate tax, which lapsed this year amid a row among lawmakers over taxing the wealthy when they die.

Democratic Senator Blanche Lincoln and Republican Senator Jon Kyl late on Tuesday reintroduced a plan to tax estates over $5 million at a rate of 35 percent. The estate tax that expired last year had taxed estates at a rate of 45 percent, above an exemption of $3.5 million for individuals and above $7 million for couples.

There is no estate tax in 2010 because lawmakers last year failed to reach a deal to extend the tax. The House of Representatives last year had passed an extension of the 2009 rates, but senators clashed over the level of the tax.

Without action, under current law the tax will rise to 55 percent, with an exemption level of $1 million.

Several billionaires have died this year, escaping the estate tax, including former New York Yankees owner George Steinbrenner.

(Reporting by Kim Dixon; Editing by Leslie Adler)

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