Tax Extensions Receiving Lots of Attention

Senate Finance Chairman Max Baucus was expected Thursday to introduce a tax plan that would extend most of the tax cuts enacted in 2001 and 2003. Baucus told a hearing that - allowing these tax cuts to expire would mean a drastic increase for tens of millions of American families. He hopes Congress can clear the legislation this year. If Congress does nothing, all of the lower tax rates would expire at the end of 2010, returning the rates to levels in place at the end of the Clinton administration.

If Congress does nothing, the estate tax will disappear for 2010 only, then resume under pre-2001 rates at the beginning of 2011 – a one million dollar exemption and a tax rate of 55 percent. Democrats generally want to keep the 2009 estate tax levels in place — a 3.5 million dollar per-person exemption and a 45 percent top rate.

All of this would appear to conflict with a more deliberate approach outlined by the White House just a day earlier. The Obama administration wants to extend the lower tax rates and expanded tax benefits for families making less than 250-thousand dollars a year. But Obama has not said when he wants Congress to consider such a bill. The White House has announced the creation of a tax code task force that will not release its report until December. That would set the stage for a comprehensive bill in 2010, not in 2009.