Estate Tax Row Stalls Pension Bill

Groups such as the American Council of Life Insurers, Washington, and the National Association of Insurance and Financial Advisors, Falls Church, Va., have been supporting work on the pension bill but expressing concern about efforts to add estate tax cut provisions that might hurt federal tax revenue.

Industry executives also have pointed out that a broad cut in estate taxes could hurt life insurers’ sales of estate planning products and services.

Insurance groups have been supporting efforts to pass a relatively modest cut in estate taxes.

Expanding the pension bill package by adding “an unsustainable estate tax reform package would, in our view, be a big mistake,” says Michael Kerley, a senior vice president at NAIFA.

“We will continue to press for the positive aspects of the pension package, as well as a reasonable and sustainable estate tax reform plan,” Kerley says.

In addition to debating whether to add an estate tax cut to the pension bill package, lawmakers have been debating whether to keep a provision that would extend a package of popular business tax incentives, such as research and development tax credits, that are often referred to as “tax extenders.”

Senate Finance Chairman Charles Grassley, R-Iowa, and Sen. Max Baucus, D-Mont., the most senior Democrat on the Senate Finance Committee, have pushed to keep the tax extenders in the conference committee pension bill package.

Some Republican leaders, including House Ways and Means Chairman William Thomas, R-Calif., now want to take the tax extenders out of the pension bill and put them in a separate bill that would include a provision calling for a big cut in the estate tax.

The move would keep the estate tax issue out of the pension bill, but it could force lawmakers with concerns about the proposed estate tax cuts to choose between blocking the cuts and passing the popular business tax incentives.

Grassley told Iowa reporters Wednesday that he was insisting on keeping the tax extenders in the pension bill because of a promise he had made. “I’ll still continue to keep my word, even if I am knifed in the back,” he said.