House Democrats have decided to hold off on the estate tax debate until after Thanksgiving, choosing instead to focus on job-creation measures. Originally, the House was scheduled to take up later this week a permanent extension of the estate tax at the 2009 levels—a 45 percent rate and a $3.5 million exemption, but punted due to opposition that it was not indexed for inflation.

Few issues divide the Democratic Caucus more than the estate tax. At $233 billion, making the 2009 rate permanent is seen as too generous by many progressive members, who prefer a return to the 55 percent and $1 million exemption, as current law provides for beginning in 2011.

Further complicating the issue is the bill is likely to contain pay-as-you-go budgetary language demanded by the Blue Dog Coalition—many of these members support making the 2009 parameters permanent. However, the Senate is not expected to support the pay-go rules.

The Senate is also conflicted on the estate tax, as most Republicans and several moderates support a 35 percent rate coupled with a $5 million exemption. This resembles legislation introduced in the House by Reps. Shelley Berkley (D-Nev.), Kevin Brady (R-Texas), Artur Davis (D-Ala.) and Devin Nunes (R-Calif.) that would gradually raise the exemption from $3.5 million to $5 million by 2019 and adjust it for inflation for future years. The tax would be reduced over the same period from 45 percent to 35 percent. However, House Ways and Means Committee Chairman Charles Rangel (D-N.Y.) has said he will continue to press for a permanent fix.

With a permanent estate tax at 2009 levels unlikely to move in the Senate, and the House Democrats unwilling to take up the more generous Berkley proposal, a fallback option of a one-year fix at the 2009 levels has recently emerged. That would halt the debate into next year when lawmakers will undertake a broad look at the tax code, with the 2001 and 2003 tax cuts set to expire at the end of 2010.

Meanwhile, the Obama administration is also recommending against a permanent fix, preferring instead to deal with the matter in the context of overall tax reform next year. With time on this year's calendar dwindling and the estate tax expiring Dec. 31, Democrats are increasingly likely to move a one-year extension, perhaps packaged with other expiring tax breaks.

The uncertain nature of the estate tax regime over the next two years is a cause for major concern for family businesses, many of which are struggling to guarantee that their business survives into the next generation. In order to ensure this survival, NSBA continues to work to encourage the House and Senate move estate tax reform that provides certainty and permanency without increasing the burden on families.