In an abrupt turn-around, business groups that for years had fought to kill the estate, or so-called death, tax are joining forces to petition Congress to reinstate it. Why?

Because the bubble is getting ready to burst.

The groups have changed positions in a bid to head off higher taxes on the horizon: Unless Congress acts, current law would raise the tax next year to 55 percent on estates after they exceed $2 million per couple, from nothing this year.

“Clearly, we can’t live with what’s going to come in 2011,” said Chris Walters, an estate-tax lobbyist in Washington for NFIB, the trade group for small businesses.

The debate stems from a 2001 Republican tax-cut bill that gradually reduced estate taxes over a decade until the levy was replaced for 2010 by a capital-gains tax on sales of some inherited assets. Starting next year, however, inheritance taxes would revert to pre-2001 levels.

Which would result in a $34 billion windfall to put towards the deficit next year alone. There are attempts in the works to change this (Senators Kyl and Lincoln have a plan to set the rate at 35% for anything exceeding $10 million per couple), but the pace at which Congress is currently working, doing nothing and letting it sunset may win the battle here.

Source: BusinessWeek