Estate Tax And Investment Advice Among First Issues Out Of The Gate
The first week of the new 108th Congress confronted the life insurance industry with a couple of old battles, permanent estate tax repeal and investment advice.
Legislation making repeal of the estate tax permanent was introduced by Rep. Jennifer Dunn, R-Wash., with more than 50 bipartisan co-sponsors.
The legislation, H.R. 57, will likely be the main vehicle for those seeking estate tax repeal, although other members of Congress sponsored bills seeking immediate repeal.
For example, on the House side, Rep. Christopher Cox, R-Calif., introduced H.R. 51 to immediately repeal the estate tax.
On the Senate side, Sen. Blanche Lincoln, D-Ark., is sponsoring a more modest approach, S. 34, which would repeal the estate tax immediately only for family-owned businesses and farms.
Interestingly, permanent repeal of the estate tax was not contained in the massive tax cut package released last week by President Bush.
However, David Winston, vice president of government affairs for the National Association of Insurance and Financial Advisors, Falls Church, Va., says opponents of repeal should not take any comfort in that fact.
While permanent repeal was not addressed in the Presidents package, Winston says, supporters of repeal will try to address it elsewhere, possibly at the Senate Finance Committee or on the floor of the Senate.
Indeed, President Bush said in a statement accompanying release of his package that he will continue to press Congress to make repeal of the estate tax permanent.
The current status of the estate tax has caused estate planning difficulties.
Under the Economic Growth and Tax Relief Reconciliation Act of 2001, the estate tax will be gradually phased down until it is eliminated on Jan. 1, 2010.
However, because of a sunset provision in that legislation, the estate tax will come back into being, exactly as it existed before the act was passed, on Jan. 1, 2011.
Speaking of the Presidents tax plan, the American Council of Life Insurers, Washington, is hoping to encourage Congress to add a provision based on its Lifetime Annuity Payout concept.
Under ACLIs LAP proposal, retirees who opt to receive their retirement savings in the form of an annuity would be taxed at the capital gains rate rather than the higher individual rate.
Jack Dolan, an ACLI spokesman, notes that President Bush discussed as part of his economic package the need to address the financial concerns of seniors.
“What better way to address it than by integrating the LAP proposal into his plan,” Dolan says.