The Senate could vote Friday both on a major pension system bill and a “trifecta” bill that includes an estate tax reduction provision.
Senate Majority Leader William Frist, R-Tenn., said Tuesday that he wants senators to vote on the trifecta bill, H.R. 5970, before they leave for their month-long summer recess, and that he also wants senators to vote this week on H.R. 4, a bill that would change the rules governing private pensions and the Pension Benefit Guaranty Corp.
The trifecta bill includes provisions that would eliminate federal estate taxes for most estates; increase the federal minimum wage for most workers to $7.25 per hour, from $5.15 per hour; and extend the research and development tax credit and other popular tax breaks.
The estate tax provision in H. R. 5970 would increase the estate and gift tax exemption to $5 million per person and then index the exemption for inflation. The capital gains tax rate, which is now 15%, would apply to estates with a value of $5 million to $25 million, indexed for inflation, and the tax rate for estates valued at more than $25 million would fall to 30%.
H.R. 5970 also would reunify the estate, gift and generation skipping transfer taxes and reduce estate and gift tax rates.
Frist has warned senators against trying to slow passage of H.R. 5970, but some members of Congress and analysts are skeptical about whether he has the votes to pass the trifecta bill.
Senate Finance Committee Chairman Charles Grassley, R-Iowa, said Tuesday during a conference call with Iowa reporters that it is unlikely that Frist will be able to secure the 60 votes needed to proceed with a vote on the estate tax reform package.
“I don’t think we’ll lose any [more] Republicans,” Grassley said. “But I don’t know where to get 3 more Democratic votes.”
Senate Minority Leader Harry Reid, R-Nev., said Sen. Max Baucus, D-Mont., who supported the Republicans on estate tax repeal when the issue came up in June, will be out of Washington for the remainder of the week.
Baucus is mourning the loss of his nephew, Marine Corps Cpl. Phillip Baucus, 28, who died Saturday in combat in Iraq.
Frist has indicated that he wants the Senate to vote on H.R. 5970 before voting on H.R. 4.
In addition to sections dealing with defined benefit pension plans, H.R. 4 includes many other sections of interest to life insurers, such as sections that would encourage employers to enroll employees in 401(k) plans automatically, loosen restrictions on agents and others who offer investment advice to members of the 401(k) plans that their firms administer, and clarify the “safest-available annuity standard” for employers that use annuities as a settlement option at retirement.
The safest-available annuity standard is significant because it will encourage more employers to offer annuities to retirees, according to officials at the American Council of Life Insurers, Washington.
A House-Senate conference committee spent more than 4 months trying to reconcile differences between H.R. 2830, a pension system bill passed by the House, and S. 1783, the Senate pension system bill. The conference committee has been unable to produce a conference report.
The authors of H.R. 5970 incorporated many of the tax provisions from the conference committee’s ill-fated pension bill draft.
H.R. 4 includes many of the other provisions from the conference committee’s pension bill draft.
Both the conference committee and the authors of H.R. 4 left out a proposed provision that would have allowed holders of flexible spending accounts to roll over up to $500 in account value each year.
Members of the House-Senate pension bill conference committee decided the FSA provision was too expensive, a lobbyist says.