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Financial Planning > Tax Planning > Tax Reform

Senate Unlikely To Approve Estate Tax Repeal

By Steven Brostoff

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NU Online News Service, June 19, 2003, 11:49 a.m. EDT — Washington

The U.S. House of Representatives voted 264-163 Wednesday to approve permanent repeal of the estate tax, but the bill is not expected to pass the Senate.

Tom Korb, director of government affairs for the Association for Advanced Life Underwriting, Falls Church, Va., says the vote for H.R. 8 in the House was not a surprise.

Permanent estate tax repeal has consistently had strong support in the House, Korb says.

However, he adds, he does not see the votes in the Senate for permanent repeal. Increasing budget deficits, combined with a variety of other priorities, will probably keep the Senate from voting in favor of permanent repeal, Korb says.

Longer term, Korb says, he believes the trend is toward permanent reform, which he notes is one of AALU’s chief goals, rather than repeal.

In the past few years, he says, budget estimates have swung wildly and, in addition, there have been changes in political leadership.

Even if Congress permanently repealed the estate tax, insurance clients might not be able to rely on that repeal. Because of the uncertainty about efforts to repeal the tax, there is more interest in reform, Korb says.

During the House consideration of H.R. 8, Rep. Earl Pomeroy, D-N.D., offered a substitute proposal that would provide for reform rather than repeal.

Under the Pomeroy proposal, the current exemption would be increased to $3 million for individuals and $6 million for couples. The top rate would be frozen at 49%.

The Pomeroy proposal lost by a 239-188 vote.

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