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Financial Planning > Tax Planning

House Democrats Reject Tax Agreement, Blast Estate Tax Deal

By Arthur D. Postal

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WASHINGTON BUREAU — House Democrats today passed a non-binding resolution rejecting a tax-cut package negotiated by Obama administration officials and congressional Republicans.

The House Democrats were especially critical of a provision in the agreement that would provide a $5 million per-person estate tax exemption.

The resolution passed by a voice vote, according to House Ways and Means Committee Tempest in the House staffers.

Rep. Lloyd Doggett, D-Texas, said the resolution was adopted by a “very loud voice vote” and that he believes House Speaker Nancy Pelosi, D-San Francisco, will respect the views of the caucus.

The package, “in the form that it was negotiated, it is not acceptable to the House Democratic caucus,” Rep. Chris Van Hollen, D-Md., said. “It’s as simple as that.”

The House Democrats’ action came as Senate Democrats weighed options for having the package come up for a vote there on Monday.

Senate Democrats must resort to a parliamentary maneuver because tax measures are supposed to originate in the House.

The House Democratic Caucus is “very upset” about the package negotiated by the White House, and there is a push to not vote on the package, regardless of what the Senate does, Ways and Means staffers said.

The estate tax provision in the package would provide a $5 million exemption and a

35% tax maximum estate tax rate. The provision would expire in two years.

Democrats support a provision backed by Rep. Earl Pomeroy, D-N.D. That provision, passed in 2009, would set a $3.5 million exemption and a 45% maximum tax rate. Pomeroy was defeated for reelection last month.

Other package features opposed by House Democrats include payroll tax language, the Ways and Means staffers said.

After the caucus vote, Obama administration officials said they remain confident that “the major components” of the tax compromise will pass, according to White House representative Jen Psaki.

A Democratic advisor to the White House said that Senate Democrats “have several vehicles they can use” as the legislative base for the tax package, and that they are working on a plan to pass a tax bill and “then jam the House” with that legislation.

The White House-Republican tax package includes a 2-year extension of the Bush-era tax cuts. This extension could cost about $314 billion, according to the Congressional Research Service.

The Association for Advanced Life Underwriting (AALU), Falls Church, Va., has been active in estate tax negotiations.

“We continue to work with lawmakers to reiterate the importance of sustainable estate tax reform in the range of 2009 law, as well as the importance of reunifying the gift and estate tax levels as these important discussions move forward,” AALU President Nat Perlmutter says in a statement.

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