Budget Plan Would Keep Estate Tax at Current Levels

Congress has adopted a budget outline that would permanently keep the estate tax at levels that are already in effect this year. That’s the approach many charities have been seeking, because they say it will help them appeal to donors. President Obama also has endorsed the idea.

In 2001, Congress passed the current estate-tax law, which gradually phases out the tax through 2009 and repeals it for 2010. In 2011, however, the current law is set to expire and estate-tax levels that applied years earlier go back into effect unless Congress takes action.

The budget outline, which sets out broad spending priorities that now must be fleshed out by Congressional committees, does not include President Obama’s proposal to curb tax breaks for charitable deductions to help pay for changes to the health-care system. It proposes a deficit-neutral reserve fund for health-care changes but does not specify where the money would come from.

But Mr. Obama’s proposal remains under discussion, according to Sen. Max Baucus, chairman of the Senate Finance Committee. “Everything’s on the table,” he said. That includes the president’s plan, he said, “but a lot of other revenue ideas are on the table, too.”