Senate Republicans will restart the long-stalled debate over repeal of the estate tax on June 6, with a critical vote on the measure likely to come June 8.
Industry officials, congressional staffers and lobbyists say the Republicans lack the votes for full repeal, and attention now is focusing on a proposed compromise being negotiated between Sens. John Kyl, R-Ariz., and Max Baucus, D-Mont., ranking minority member of the Senate Finance Committee.
Officials at the office of Senate Majority Leader William Frist, R-Tenn., confirmed he will file a motion to close off debate on the bill June 6. Given the votes are lacking for full repeal, Frist has not commented on whether he will even allow a vote on the proposed compromise.
David Stertzer, CEO of the Association for Advanced Life Underwriting, says his group is “heavily engaged in communicating with senators and working with a variety of 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.”
He explains the issue “comes down to a volatile mixture of policy, fiscal concerns and politics” and that “it’s hard to handicap where this comes out.”
The AALU priority is “reform that is sustainable,” with Stertzer saying responsible reform would be a $2.5 million exemption and 45% top rate. That would exempt 99.7% of decedents from estate tax liability and is estimated to cost $330 billion over the 10-year period from 2012 to 2021.
By contrast, Stertzer says, repeal is estimated to cost $796 billion and the “reform” proposal advanced by Sen. Kyl–with a $5 million exemption and 15% rate–is estimated at 88% of the cost of full repeal.
“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.
According to Congress Daily, Kyl’s compromise calls for a 15% rate and an individual exemption amount of $5 million, which would effectively shield estates of up to $10 million from the tax.
A Baucus aide confirmed the senator has countered with a proposal that includes a graduated rate structure setting rates of 15%, 25% and 35% depending on the estate size.
The aide said, “We are not discussing any details of internal discussions.”
But Democrats are asking Baucus to back off because of the huge cost to federal revenues of even the compromise proposal.