WASHINGTON–Life insurance agent trade groups had a guarded reaction to the proposed compromise tax cut unveiled by President Barack Obama late Monday.
Comments by officials at the Association for Advanced Life Underwriting (AALU) and the National Association of Insurance and Financial Advisors (NAIFA) were both made as President Obama prepared to hold a mid-afternoon press conference in an effort to create support within his own party for the expensive proposal.
Democrats in both the House and Senate angrily opposed a provision of the proposal that would extend the Bush-era tax cuts to even the wealthiest taxpayers.
Both AALU and NAIFA again reiterated that their priority is establishment of sustainable and certain estate tax policy.
But they both noted that many details were lacking–for example, whether the deal would include reunification of the estate and gift tax and what special rules would be crafted for taxpayers who have died in 2010.
AALU officials said in their comments they were concerned about the long-term sustainability of the expensive proposal “in light of bipartisan recognition of the need to address escalating federal budget deficits.”
And NAIFA officials said they “hope that the reported two-year agreement on estate tax rules between President Obama and Congressional leaders will in fact turn out to be the beginning of political sustainability and certainty.”
Under the deal, each person would receive a $5 million exemption from the estate tax, and the top rate would be 35%, the level favored by Republicans as a compromise to their demand for an end to the estate tax. The package would expire in two years.
Under legislation proposed by Rep. Earl Pomeroy (D-N.D.) in 2009, the rate would be a $3.5 million exemption and a 45% maximum tax rate. Pomeroy was defeated for reelection last month.
The deal includes a two-year extension of the Bush-era tax cuts. This is estimated to cost $314.9 billion, according to a Dec. 3 study from the nonpartisan Congressional Research Service.
It also includes a 2% rollback of individuals’ payroll taxes that are used to fund Social Security. The White House said the cost of this one-year measure is $120 billion and that it wouldn’t affect Social Security’s solvency.
Also included is a child tax credit, earned income tax credit and a credit to help students afford college.
Another provision would preserve extended jobless benefits, also known as unemployment insurance, for 13 months. The White House estimates a 13-month extension would cost $56 billion.