The new chairman of the House Ways and Means Committee wants to move quickly to resolve the estate tax issue, but believes the next step must be taken by the Senate, according to a spokesman.
Consistent with the comments of the House Democratic leadership, officials at the Association for Advanced Life Underwriting are telling members that the next thing to watch for in a situation where it is now unclear how a gridlocked Congress will act is whether Congress writes reconciliation instructions in the FY 2011 budget resolution.
In a note to members, Sarah Spear, AALU director of policy and public affair says that whether reconciliation is mandated “will be telling as to whether leadership will be able to move forward with tax legislation.”
That includes the estate tax, she says, because mandating reconciliation would mean that Senate passage of any tax legislation would require only 51 votes to pass.
The Ways and Means Committee spokesman, Matt Beck, said the House wants to use as the basis for negotiations legislation it passed last December that would extend the 2009 estate tax levels until 2012. These would include a $3.5 million individual exemption and a 45% top rate, retroactive to Jan. 1.
“The chairman believes the action is now in the Senate,” Beck said. “We will continue to work to formalize the legislation.”
In earlier comments, the chairman, Rep. Sander Levin, D-Mich., said the House “remains steady” with its stated position of retaining the 2009 levels.
At present there is no estate tax, but under current law it returns in 2011 to a $1 million per-person exemption and a 55% rate.
Tom Currey, president of the National Association of Insurance and Financial Advisors, is interpreting Levin’s comments as trying to “jump-start work on some sort of compromise.”
He adds that “the estate tax has been sitting there since January. If they don’t do something pretty soon, Congress may miss the boat here. We have to do something or it will go back to $1 million and 55%.”
Currey says the issue is important to NAIFA members. “They tell us anecdotally that it is now a little more difficult to get people who could potentially be affected by the estate tax to focus on this because they have to plan for at least three different scenarios.”
Specifically, he says, the first scenario is that “some people think it is gone forever. What they don’t remember is that it returns next year.”
The next scenario, he continues, “is that it indeed goes back to $1 million and 55%.”
That, Currey says, “is a worst case scenario for most taxpayers because then they have to do more planning than they really planned for.”