Senators of both parties are talking, but it may be mainly talk
Efforts are under way in the Senate to break the deadlock over repeal of the estate tax, but Democrats and Republicans are seemingly much farther away from a deal than recent reports have indicated.
Talks apparently have centered on a threshold level of $3 million to $5 million. But, some estimates say that if the final threshold is agreed upon as $3.5 million and the tax rate is set at the current gains tax rate of 15%, it would cost as much as 87% of total repeal.
Under current law, the threshold on the exemption rises through 2009, and the tax is completely eliminated in 2010. But it would return in 2011, with a $675,000 exemption and a top tax rate of 55%.
Immense interest in the issue has been triggered by the decision of Sen. Jon Kyl, R-Ariz., representing the advocates for repeal of the estate tax, to file an amendment to the energy bill now pending in the Senate.
Both the Wall Street Journal and the New York Times reported on the issue last week, and lobbyists and interest groups on both sides of the issue are stepping up their pressure on Congress and bombarding the public through ads and press conferences advocating their positions.
An industry lobbyist said Senate Republicans, led by Kyl, are pushing for a deal, and Minority Leader Sen. Harry Reid, D-Nev., has authorized talks, with Sen. Charles Schumer, D-N.Y., chairman of the Democratic Senatorial Campaign Committee, leading the effort.
However, one industry lobbyist said, “The negotiators are not as close to a deal as the Wall Street Journal has portrayed.”
Congressional staffers and lobbyists on the issue say the amendment has been “filed” to keep the Democrats’ feet to the fire on the issue, but introduction is unlikely because it would delay, if not kill, action on the energy bill, a Bush administration and Republican priority.
Kyl’s amendment would raise the threshold for taxing estates going forward to $10 million a person, with estates above that taxed at the 15% capital gains rate.