Congress will begin determining this week whether it will deal with the politically volatile issue of the future of the estate tax in 2008 or punt it to the next Congress.
A hearing in the Senate Finance Committee on “Federal Estate Tax: Uncertainty in Planning under the Current Law,” will take place on Nov. 13.
According to the Association for Advanced Life Underwriting, the focus of the hearing will be on problems related to current estate tax law.
AALU said there will be another hearing on the issue in December or January, which will address the current and potential future options for reform, followed by a markup of legislation proposed by Sen. Jon Kyl, R-Ariz., probably sometime in the spring.
Under current law, the estate tax gradually declines until it is phased out in 2010, but then reverts to the $1 million level with a 55% tax rate in 2011.
Congress passed a non-binding budget document last year that established the 2009 level of estate tax under current law of a $3.5 million per person exemption and a top tax rate of 45% as the rate through 2012.
But because it is non-binding, it is not law. A number of Democratic senators on the Finance Committee have previously supported varying forms of repeal, “but there is now a significant consideration to the cost and competing priorities,” an AALU official said.
Additionally, according to AALU, “Up to this point, House Ways & Means Chairman Charles Rangel, D-N.Y., has shown little interest in supporting a costly reform package in the House.”
Witnesses expected to testify at the hearing are: Warren Buffett, chairman and CEO of Berkshire Hathaway; Conrad Teitell, an estate planning attorney with Cummings & Lockwood, LLC; Dean Rhoads, a state senator and rancher from Nevada; and Eugene G. Sukup, chairman of Sukup Manufacturing Company, an Iowa firm.
“These hearings are proof that there continues to be a strong desire in the Senate to reform the estate tax prior to President Bush’s sun-setting tax provisions in 2010, said AALU CEO David Stertzer.