Senate Votes To Accelerate Temporary Repeal Of Estate Tax
The U.S. Senate voted to accelerate the temporary repeal of the estate tax, but not to make the repeal permanent.
However, the process is far from over, industry representatives say.
As part of the debate over the fiscal year 2004 budget, the Senate approved an amendment repealing the estate tax on Jan. 1, 2009, one year earlier than the current repeal date of Jan. 1, 2010.
However, the repeal will still sunset on Jan. 1, 2011, meaning the estate tax will come back into being on that date.
Jack Dolan, a spokesman for the American Council of Life Insurers, Washington, says that in effect, what the Senate did was establish a placeholder in the budget resolution for accelerated repeal of the estate tax.
Dolan says only 51 Senators voted in favor of accelerating the repeal, which is the smallest vote total received by the repeal issue during the course of the current debate.
However, he adds, the issue still must be addressed specifically by the Senate Finance Committee.
But while the budget resolution would accelerate the temporary repeal, Dolan notes, some people on Capitol Hill will not be happy until the estate tax is repealed in its entirety.
ACLI, Dolan says, supports reform of the estate tax and will continue to monitor the estate tax issue in Congress, adding that in the discussions, life insurers must be at the table.
Albert J. “Bud” Schiff, president of the Association for Advanced Life Underwriting, Falls Church, Va., and president of Stamford, Conn.-based NYLEX Benefits, says AALU takes great solace in the fact that repeal legislation garnered 58 votes in the Senate last year and only 51 this year.
More and more people, he says, are starting to realize that anything done on the estate tax should be permanent and sustainable, and total repeal of the estate tax is not sustainable.
It is important, Schiff says, that people be able to rely on the law when they engage in long-term planning.
He says, however, he expects to see other efforts to permanently repeal the estate tax. Indeed, he says, there will likely be several votes in the House, which may pass three or four different versions of permanent repeal.
However, Schiff says, even though the accelerated repeal of the estate tax passed in the Senate with 51 votes, under the Senates parliamentary rules permanent repeal will require 60 votes.
He says this will be difficult to achieve due to the current budgetary climate and the uncertainty surrounding the war with Iraq.
AALU, Schiff adds, continues to support estate tax reform, and senses there is growing support for sensible reform that is immediate and sustainable.
In other news, Rep. Kay Granger, R-Texas, says the primary reason why some 41 million Americans lack health insurance is the tax code.
In a speech before the the Arlington, Va.-based National Association of Health Underwriters, Granger says the tax code discriminates against people who dont get health insurance from their employers.
She says this could be remedied if Congress passes her legislation, H.R. 1236, that would create a refundable tax credit to individuals who purchase health coverage. A refundable credit is one available to all citizens, even those who have no tax liability.
Granger says the development of an employer-based health insurance system was an “accident.” It began, she says, during World War II, when wage and price controls prevented employers from rewarding key employees.
Employers, Granger says, began looking for other ways to compensate key employees and began offering health insurance. Congress, meanwhile, provided businesses with a deduction for health insurance premiums.
The system worked well for many years, she says, when most employees stayed with a single employer for life.
But now, Granger says, things are different. The average employee, she says, will change jobs nine times during the course of a career.
This, she says, reduces the incentive for employers to offer employees a choice of insurance plans.
Employees, Granger says, are subject to the whim of the employer and must take whatever insurance the employer can afford.
As for people who do not have employer-based coverage, she adds, they must pay for individual insurance with after-tax dollars.
Granger notes that most people with employer-provided insurance say they are satisfied with what they have, and she is not proposing to eliminate the system.
Rather, she says, she believes there must be a level playing field by ending the tax code discrimination against individuals.
As for rising pharmaceutical costs, which some have cited as a major reason why health care costs are soaring, Granger says she does not believe drug costs represent a national crisis.
Rather, she says, they are a sign of the times. The problem, Granger says, is that there are so many more drugs available today aimed at resolving a whole host of medical problems.
The nation did not spend as much for pharmaceuticals in the past because there were not as many available, she says.
Finally, efforts to enact medical malpractice reform appear to be temporarily stalled in the Senate.
Sources tell National Underwriter that Republican and Democratic negotiators are trying to work out a bipartisan agreement, but remain at odds over a cap on noneconomic damages.
Reproduced from National Underwriter Edition, March 31, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.