In an effort to spur estate tax reform in the Senate, House Ways & Means Committee Chair William M. Thomas (R-CA) yesterday introduced H.R. 5638, the Permanent Estate Tax Relief Act of 2006.  The bill would:

• Reunify the estate, gift, and generation-skipping transfer taxes
• Permanently raise the estate tax exemption level to $5 million, effective 2010
• Estate two estate tax brackets:
  • Estates up to $25 million:  Capital gains rate (currently 15%, but scheduled to increase to 20% in 2011)
  • Estates over $25 million:  Twice the capital gains rate (currently 30%, but 40% in 2011 unless Congress acts to reduce the capital gains rate)
• Allow a surviving spouse to carryforward any portion of the $5 million exemption not used by the deceased spouse
• A new 60% deduction for qualified timber capital gains, from the date of enactment through 2010

For more information, see:

• Ways & Means Committee Press Release
• Ways & Means Committee Summary
• Text of H.R. 5638
• Joint Committee on Taxation Revenue Estimate of H.R. 5638

For press coverage, see:

• Associated Press
• Wall Street Journal