NU Online News Service, June 12, 4:19 p.m. – The U.S. Senate is unlikely to pass legislation that would permanently eliminate the estate tax, according to Andrew Kligerman, a stock analyst with Bear Stearns & Company Inc., New York.

The Senate could vote on an estate-tax repeal measure as early as 5 p.m. today.

“We think that the Senate is unlikely to eliminate the 2010 sunset provision,” Kligerman writes in a new research note. “In a February vote on this issue, the Senate came up essentially two votes short of eliminating the sunset. Since then, there appears to have been some slippage in the number of votes in favor of permanent repeal, because estate taxes are a revenue source for critical programs, such as Social Security.”

Existing law calls for the government to reduce the estate tax gradually through 2009, then repeal it altogether in 2010. Unless Congress passes additional legislation, the estate tax would return in 2011 at 2001 levels.

The legislation now being pondered in the Senate, which is supported by the Bush administration, would eliminate the reinstatement provision.

Many life insurance companies support the idea of repealing the estate tax on principle, but it could hurt, or at least reshape, the market for estate-planning products and services.

But, even if the estate tax were annulled, Kligerman predicts the effect on insurers would be slight.