Senators See No Action This Session On Reversing Tax Bill’s Sunset
Now that President Bush has signed the controversial $1.35 trillion tax relief bill, the next question is when will Congress address the unresolved issues created by the legislation–in particular, the sunset provision.
The early evidence is that it will not be anytime soon.
Already, House Majority Leader Dick Armey, R-Texas, and Ways and Means Committee Chairman Bill Thomas, R-Calif., have criticized the sunset provision.
They say they want Congress to eliminate it as soon as possible.
But they are running into a roadblock in the Senate, now under the leadership of the Democratic Party.
Senate Finance Committee Chairman Max Baucas, D-Mont., says the Senate will not revisit the tax bill during the 107th Congress, a position that was confirmed by the Ranking Republican on the committee, Sen. Charles Grassley, R-Iowa.
Doug Bates, assistant vice president with the American Council of Life Insurers, Washington, says that while Congress will have to revisit the sunset eventually, due to the uncertainty it has created, it probably will not happen until the public demands it.
The tax relief bill repeals the estate tax on Jan. 1, 2010. However, because of the sunset provision, the estate tax will go back into effect, exactly as it was before the legislation, on Jan. 1, 2011.
To alter this timetable, Congress will have to enact new legislation.
Bates says reconsideration of the timetable will happen when the public begins raising a hue and cry that the result of the tax relief bill is unworkable in terms of estate planning.
“People will start demanding that Congress revisit the estate tax because planning is a mess. They will complain that they cannot plan in this environment,” Bates says.
Morris Goff, director of government relations for the National Association of Insurance and Financial Advisors, Falls Church, Va., says he believes the new Democratic leadership in the Senate will not want to reexamine the tax bill for political reasons.
Goff says he believes Democrats will instead seek to promote a variety of issues that play well with voters, but then say they cannot be accomplished because there is no money left due to the tax relief bill.
“They think this helps politically in 2002,” Goff says, predicting Democrats will try to put the Bush administration in a box.
Bates says he does expect to see two tax bills emerge during the remainder of the 107th Congress that could be of interest to the life insurance industry.
One bill, he says, will be a minimum wage bill that will include a handful of small-business provisions.