Time is running out for efforts to abolish the estate tax.

Sen. John Kyl, R-Ariz., a key advocate for repeal, delivered that message here today at a summit for “permanent death tax repeal.”

The Senate originally was going to vote on outright repeal this month, but now the press of other issues has pushed the likely voting date back to June, Kyl said.

Kyl conceded that outright repeal is unlikely to occur, but he said he hoped to win enough support to pass a compromise proposal that would establish a $5 million threshold for the estate tax for each spouse.

The compromise proposal would index the threshold for inflation; set the tax on estate assets above the threshold at the capital gains rate, which is now 15%; and step up the basis for assets bequeathed to heirs, Kyl said.

If Democrats win more seats in November and an opponent of outright estate tax repeal, such as a Democrat or Sen. John McCain, R-Ariz., becomes president in 2008, that “will dramatically negatively affect our ability” to win repeal,” Kyl said.

Kyl denied that abolition of the estate tax would be a death blow to the life insurance industry.

“The life insurance performs a compelling function,” Kyl said. “They have literally hundreds of products, and eliminating the need for one of the products is not going to put the industry out of business.”

Meanwhile, at the annual meeting of the Association for Advanced Life Underwriting, Falls Church, Va., AALU President Roger Sutton described the upcoming vote on estate tax repeal as “the most significant short-term threat we face.”

“We continue to believe that repeal is a fiscally unsustainable policy,” Sutton said. “In the interest of providing certainty in the marketplace, AALU continues to support an estate tax reform proposal with a $2.5 million dollar exemption and a 45% top rate. Our lobbying efforts continue to focus on the 10 to 12 Senators who will ultimately determine what level of reform can garner the necessary 60 votes for passage, and countering the politically heated rhetoric of pro-repeal forces.”

Currently, a tax bill passed in 2001 gradually is scheduled to phase out the estate tax by 2010.

But the bill is set to sunset in 2010, restoring the estate tax to the level it was when President Bush became president in 2001. In 2001, the tax rate was 55% on estates exceeding a threshold of $600,000 for each spouse.