Estate Tax Repeal - Off Again, On Again, On Hold Again

Category: Estate and Inheritance Tax

The on-again, off-again, on-again saga of federal estate tax repeal, is on hold again. Bloomberg.com reports in part:

"Senate Majority Leader Bill Frist postponed a vote on a measure to exempt most multimillionaires from federal estate taxes after conceding Republicans lack the votes to pass legislation adopted by the House last week.

The delay is the third since Frist began his quest to repeal or reduce the tax last year and the second time this month his ambitions were thwarted by Democrats who say the government needs the revenue generated by the tax. The House passed the legislation 269-156 on June 22 after Frist urged it to act before the Independence Day recess next week.

[Senator John] Kyl said Senate Republicans are determined to pass the legislation this year, though they want to ensure they have the 60 votes needed to withstand a challenge by Democrats. Republicans control 55 seats in the chamber; 60 votes are required to overcome filibusters, the legislative maneuvers that can kill legislation.

House Measure

The House legislation would spare all but about 2,800 multimillion-dollar estates from federal tax by exempting the first $10 million of a couple's estate from any tax. Estates valued between $10 million and $25 million would be taxed at the capital-gains rate, while estates of more than $25 million would be taxed at top rates of 30 percent to 40 percent.

The measure, which would take effect in 2010, also includes a tax break for timber companies intended to lure Senate Democrats from timber-producing states such as Washington, Arkansas, and Louisiana.

The measure, characterized as a take-it-or-leave-it offer by House Ways and Means Committee Chairman Bill Thomas, a California Republican, has had a lukewarm reception in the Senate.

2,800 Estates

Under current law, 12,600 estates -- or less than 1 percent of all people who die -- will be subject to the tax this year, according to estimates by the Tax Policy Center, a non-partisan research institution in Washington. The center estimated that a plan similar to Thomas's would reduce the number of taxable estates to 2,800 and would cut their tax rate to as low as 15 percent from about 45 percent.

The legislation also repeals a federal deduction for tax payments to the 23 states that retain their own estate or inheritance taxes, including Washington, Tennessee, Ohio, New York, New Jersey and Connecticut. That would subject residents of those states with large estates to double taxation, said Harley Duncan, executive director of the Federation of Tax Administrators, a Washington-based association of state tax officials. "

New Life for Estate Tax "Reform"?

Category: Estate and Inheritance Tax

Ah, politics and pork. One of my least favorite things about the political process is the institutionalized blackmail of slipping a legislative item that has nothing to do with a package of legislation into said package, and saying "I vote 'yes' if you keep my item, or 'no' if you don't". This is how the pork gets into the package.

In keeping with this fine tradition, elderlawanswers.com and other sources have indicated that the Republicans who lost the estate tax repeal vote earlier this month may try it again by putting the repeal legislation in a pending pension reform package.

Estate Tax Changes May Be Slipped Into Pension Legislation - Elder Law Answers Articles: "Republican lawmakers, who so far have been unable to win Senate approval of either full estate tax repeal or a significant reduction in the tax that wealthy heirs pay, are now considering another tactic: slipping estate tax 'reform' into a pension bill now in a House-Senate conference committee.

The pension legislation, H.R. 2830, which seeks to put the nation's defined benefit pension plans on a sounder footing, is being finalized by a conference committee reconciling different House and Senate versions.

The 'primary advocate' for attaching estate tax reform to the pension bill, according to the National Underwriter, an insurance industry publication, is Sen. Trent Lott (R-MS). Lott said he doubts that a deal on reducing the estate tax can emerge in the Senate, and so is viewing the pension bill conference report as an alternative vehicle."

News - Estate Tax Repeal Defeated, Compromise Package Up

Category: Estate and Inheritance Tax

Category: Estate and Inheritance Tax

From Bloomberg.com:

The U.S. Senate voted to block a repeal of the federal tax on multimillion dollar estates, dealing a setback to Republicans and the Bush administration.

The Republican proposal failed to clear the 60-vote threshold necessary to overcome a procedural hurdle. The 57-41 vote ends for now the hopes of opponents that the levy, dubbed a ``death tax'' by Republicans, will be permanently repealed.
Senate Minority Leader Harry Reid, a Nevada Democrat, said Republicans were focusing on a tax that affects less than 1 percent of the population while ignoring higher priority items such as gas prices, uninsured workers, a rising national debt, and an outdated minimum wage.

``The estate tax is not high on the agenda of people in Nevada,'' he said. ``I think we're wasting precious days.''

The Senate was the last hurdle for groups that have lobbied for repealing the estate tax for more than a decade. The House of Representatives voted 272-162 in April 2005 to repeal the tax on a permanent basis, and the Bush administration says it wants to abolish the levy. The Senate fell six votes short of repealing the tax permanently in 2002.

An alternative approach championed by Republican Senator Jon Kyl and Finance Committee Chairman Charles Grassley would only tax estates valued at more than $10 million at rates of between 15 percent and 30 percent.

Reid, a Nevada Democrat, said the alternative proposal is an ``absolute farce'' because it would still spare wealthy decedents from paying up to 90 percent of the estate taxes they would otherwise owe. ``Someone who is worth $30 million net -- that's a lot of money -- they would be paying less taxes than someone who works at a plant in Henderson, Nevada,'' Reid said.