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AALU Analyzes Budget Resolution Estate Tax Provision

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WASHINGTON — The Association for Advanced Life Underwriting has explained what congressional leaders really did earlier this week when they wrote rules for considering estate tax bills and other bills that might affect the budget.

Members of the Senate voted 53-43 Wednesday to approve a budget resolution measure, the Conference Report to Accompany Senate Continuing Resolution 13, which will help shape the budgeting proces.

Members of the House voted 233-193 to agree to the S. Con. Res. 13 conference report.

The budget resolution creates a framework for considering bills that might affect the budget, but it does not have a direct effect on budget appropriations.

Earlier this week, our quick reading of the conference report suggested that the budget resolution agreement estate tax provision could reunify estate and gift taxes and also provide for “portability,” meaning that a couple would not have to create a trust for the estate of the “second to die” in a family in order for the family to get the full $7 million estate tax exemption.

It also looked as if Congress would include the estate tax provision in the budget reconciliation process, which gives supporters of a provision the ability to get a measure to the Senate floor with just 51 votes, rather than 60.

That quick reading was incorrect, according to the AALU, Falls Church, Va..

The reconciliation instructions included in the final budget resolution were reserved for health care and education. The committees of jurisdiction for those subjects were instructed to report to the House and Senate Budget Committees by Oct. 15.

The budget resolution also proposes creation of a deficit-neutral reserve fund for health care reform.

No reconciliation instructions were written for an estate tax bill, an AALU official says.

In addition, the estate tax provision now in the budget resolution would “only freeze the exemption and rate at 2009 levels, nothing more,” the AALU says.

The budget resolution provision does not include reunification and portability, the AALU says.

But three pieces of legislation now under consideration could lead to “reunification of the lifetime credit for the estate and gift taxes, as well as portability,” the AALU says.

A Senate bill, S. 722, introduced by Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, and a House bill, H.R. 2023, introduced by Rep. Jim McDermott, D-Wash., a member of the House Ways and Means Committee would implement reunification and portability, the AALU says.

“Additionally, an amendment sponsored by Sen. Blanche Lincoln, D-Ark., and Sen. Jon Kyl, R-Ariz. that was approved 51-48 during the Senate budget debate would provide additional funds to implement reunification and portability,” the AALU says.

Links to more information about the continuing resolution are available here.:


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