Senate Republicans plan to restart the long-stalled debate over permanent repeal of the estate tax June 6.
Industry officials, congressional staffers and lobbyists say Republicans lack the votes for full repeal. Sens. John Kyl, R-Ariz., and Max Baucus, D-Mont., the most senior Democrat on the Senate Finance Committee, are negotiating a compromise.
Staffers in the office of Senate Majority Leader William Frist, R-Tenn., confirmed that he will file a motion to close off debate on the estate tax repeal bill June 6. Frist has not commented on whether he will allow a vote on the proposed Kyl-Baucus compromise.
David Stertzer, chief executive of the Association for Advanced Life Underwriting, Falls Church, Va., says the trade group is “heavily engaged in communicating with senators and working with a variety groups in disseminating our pro-reform message in advance” of the vote.
Meanwhile, Stertzer says, “there are active discussions among several senators to explore a possible compromise.”
The issue “comes down to a volatile mixture of policy, fiscal concerns and politics,” and “it’s hard to handicap where this comes out,” Stertzer says.
Stertzer says the AALU is pushing for sustainable reform.
Responsible reform would create a $2.5 million exemption and a 45% top rate. That would exempt 99.7% of decedents from estate tax liability and could cost about $330 billion from 2012 to 2021.
Full repeal could cost about $796 billion over the same period, and a Kyl proposal to create a $5 million exemption and a 15% top rate would cost 88% as much as full repeal, Stertzer estimates.
“That is a huge cost given the other national priorities that will have budgetary consequences, including other tax policy decisions that impact many more Americans and the increasing pressures on the nation’s entitlement system,” Stertzer says.
Baucus has proposed a rate of 15% for the smallest taxed estates, 25% for midsized taxed estates and 35% for the largest estates.
But observers say other Democrats are asking Baucus to back off because of worries about what the compromise proposal could do to federal tax revenue.