As Senate Rejects Estate Tax Repeal, Proponents Vow To Fight On
The Senate vote last week against permanent repeal of the estate tax probably ends consideration of the controversial issue for the rest of the year, industry representatives say.
The effort to permanently repeal the estate tax ended when proponents fell six votes short of the 60 needed in the Senate to approve a repeal measure. The Senate vote was 54-44.
“In reality, the Senate vote was the last shot this year for those who want estate tax repeal at all costs,” says David Winston, vice president of government affairs for the National Association of Insurance and Financial Advisors, Falls Church, Va.
It is clear, Winston says, that since June of last year, the proponents of repeal lost significant traction.
But supporters of repeal vow not to give up the fight.
The outcome in the Senate was not a surprise, given that 60 votes were needed for permanent repeal, says Maria Berthoud, senior vice president of government affairs for the Independent Insurance Agents and Brokers of America, Alexandria, Va.
However, she says, the fact that 54, or a majority of Senators, support repeal is encouraging. “We will be back at some point, sooner or later,” Berthoud says
Under current law, the estate tax will phase out on Jan. 1, 2010. However, due to a sunset clause in the phase out legislation, the estate tax will return on Jan. 1, 2011.
It was unclear at press time whether Congress would now take up efforts to reform, rather than repeal, the estate tax. Much of the media speculation was that both Democrats and Republicans would spar over the issue in the upcoming Congressional elections.
Winston says he believes senators considered the issue of repeal in light of the resumption of budget deficits, the need to enhance homeland security, the desire to provide Medicare beneficiaries with a prescription drug benefit, and other more pressing concerns.
NAIFA, he adds, supports significant reform of the estate tax so that more than 99% of Americans would not be subject to it.
In other news, a House Financial Services Committee panel continued its examination of optional federal chartering of insurance companies, and raised the possibility of a life insurance-only system.
The discussion came as representatives of the American Council of Life Insurers, Washington, and a major property-casualty association, the National Association of Independent Insurers, Des Plaines, Ill., acknowledged the significant differences between the life insurance and p-c insurance industries.
Joseph J. Gasper, president of Nationwide Financial Services, Columbus, Ohio, who represented ACLI, calls the current regulatory system, a “competitive albatross” for life insurers.
The system was designed, he says, when the life insurance industry was much different than today. Life insurers no longer focus simply on traditional life insurance products, according to Gasper.