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The amount of
property that passes free of the federal estate tax will
increase from $2,000,000 during 2008, to $3,500,000
during 2009, and to an unlimited amount during 2010 when
the tax is repealed. The tax is then scheduled to
return in 2011.
The tax not only returns in 2011, it
returns to the amount that existed in 2000 which allows
a $1,000,000 taxable estate to remain untaxed.
Sunset Provisions
The
return of the Federal Estate Tax in 2011 is due to a
"sunset provision" in EGTRRA, (The Economic Growth and
Tax Relief Reconciliation Act of 2001), the law that
created these changes to the tax.
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A
sunset provision is part of a law that requires the
automatic termination of that law on a specific date.
The sunset provision that is a part of EGTRRA was used
to avoid the "Byrd Rule."
The
Byrd Rule
Named for its creator, Sen. Robert
Byrd, the Byrd Rule allows the objection of just one
U.S. Senator to defeat the passage of any law that will
affect revenue for more than ten years.
Although any such objection may be
overridden with the support of 3/5 of the Senate, it was
not believed that 3/5 of the Senate would support EGTRRA
when it was proposed.
In order to avoid the Byrd Rule, a sunset provision was
included that automatically terminates the law within
ten years. By ending within ten years, EGTRRA does not
affect revenue for more than ten years and its passage
could not be overridden by just one Senator.
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