The State of Estate Tax Reform
Senate Majority Leader Bill Frist (Republican from Tennessee) said late last week he will bring up a compromise bill that would permanently reduce the estate tax. Specifically, he said such a bill will originate in the House and include enough “sweeteners” (i.e., tax incentives) to gain the 60 votes needed to move in the Senate. In a press statement, Majority Leader Frist said, “I will ask the Speaker and the House to send a bill to us that would be a permanent solution to the death tax. I will encourage them to attach appropriate provisions to make it attractive, and will hold a vote by July 4," adding, “I am not leaving the Senate without finding a permanent fix.”
On June 8, 2006, the Senate rejected a bill that would have permanently repealed the estate tax. Under a 2001 law, the estate tax is being phased out, culminating in a full repeal in 2010. When the law expires at the end of 2010, however, the estate tax will revert to its 2001 level, with a maximum rate of 55 percent.
So, the question now is what exactly will be the compromise introduced in the House. According to Congressional staff, the leading contender is a modified proposal from Sen. Jon Kyl (Republican from Arizona). The Kyl proposal includes a $5 million per-spouse (i.e., $10 million per couple) exemption and 15 percent tax rate and an 30 percent tax on estates that exceed a $30 million per person threshold.
If Republican leaders think they can get 60 votes for Sen. Kyl’s proposal, expect House Way & Means Chairman Bill Thomas (Republican from California) to introduce the legislation, which would quickly move through the House. Then, Majority Leader Frist would bring the legislation to the Senate floor where Democrats will no doubt wage a fight.
If Republican leaders can’t get 60 votes for the compromise, they may look to attach estate tax language to pension reform legislation (H.R. 2830) currently pending in conference negotiations.
On June 8, 2006, the Senate rejected a bill that would have permanently repealed the estate tax. Under a 2001 law, the estate tax is being phased out, culminating in a full repeal in 2010. When the law expires at the end of 2010, however, the estate tax will revert to its 2001 level, with a maximum rate of 55 percent.
So, the question now is what exactly will be the compromise introduced in the House. According to Congressional staff, the leading contender is a modified proposal from Sen. Jon Kyl (Republican from Arizona). The Kyl proposal includes a $5 million per-spouse (i.e., $10 million per couple) exemption and 15 percent tax rate and an 30 percent tax on estates that exceed a $30 million per person threshold.
If Republican leaders think they can get 60 votes for Sen. Kyl’s proposal, expect House Way & Means Chairman Bill Thomas (Republican from California) to introduce the legislation, which would quickly move through the House. Then, Majority Leader Frist would bring the legislation to the Senate floor where Democrats will no doubt wage a fight.
If Republican leaders can’t get 60 votes for the compromise, they may look to attach estate tax language to pension reform legislation (H.R. 2830) currently pending in conference negotiations.
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