NU Online News Service, March 11, 2004, 7:03 p.m. EST, Washington – Growing budget deficits may be softening support in Congress for permanent repeal of the federal estate tax.[@@]
Even some congressional advocates who have agreed on the need for repeal now are more interested in permanent reform, reform advocates say.
Chuck Collins, co-founder of Responsible Wealth, Boston, says many members of Congress are telling the pro-reform group that they are willing to accept reform. The next question, he says, is what kind of reform.
Bob Plybon, president of the Association for Advanced Life Underwriting, Falls Church, Va., says the AALU and groups like Responsible Wealth have dedicated considerable effort to promoting the merits of estate tax reform.
“It appears that estate tax reform is making some headway in conjunction with large current and future projected federal budget deficits,” Plybon says.
Jack Dolan, a representative of the American Council of Life Insurers, Washington, agrees.
“It appears that increasing concern about the budget and federal deficits is driving those who support repeal to start thinking about permanent reform,” he says.
Indeed, Plybon notes that Senate Budget Committee Chairman Don Nickles, R-Okla., a supporter of repeal, has reportedly floated an estate tax reform proposal.
The Nickles proposal reportedly would increase the estate tax exemption to $3.5 million for individuals and $7 million for married couples. In addition, it would gradually reduce the estate tax rate to 15% to 20%, the same as for capital gains.
Similarly, Senate Finance Committee Chairman Charles Grassley, R-Iowa, has reportedly discussed an exemption of $5 million for individuals.
The current exemption is $1.5 million for individuals and $3 million for couples.
Plybon says these proposals are not consistent with the level of reform that AALU believes is affordable and sustainable. He says an individual exemption of $2.5 million would shield more than 99% of Americans from estate tax liability.
“Still,” he says, “AALU sees recent developments as signs of progress by perhaps beginning to move the debate from estate tax reform versus estate tax repeal to what level of estate tax reform is affordable.”