Members of the Senate Finance Committee and their staff apparently continue to discuss what to do about the estate tax.
Jay Heflin in the Hill reports that talks continue in the Senate. He reports they are discussing giving taxpayers the option of “prepaying the estate tax”, not sure exactly what that means. A taxpayer can do the same thing now by making a taxable gift and paying gift tax (actually a wise thing to do by the wealthy because the gift tax paid escapes estate tax, otherwise at death one is paying estate tax on the estate tax that will be paid.) The incentive would be an unspecified lower rate.
He also reports they are discussing changing the exemption to $3,500,000 with that increasing to $5,000,000 with a 35 percent top rate. There would be no indexing for inflation, however. It appears to this author the source of the story is likely a Republican staffer wishing for such changes. The article also states:
Providing taxpayers with a prepayment option and lowering the estate tax to 35 percent has been discussed for months, but sources said conversations on the matter turned a corner after lawmakers learned the proposal would less expensive as originally expected.
The proposal’s official cost is unknown, since it hasn’t been scored and lawmakers have yet to ink the deal. However, a potential payfor for it could be placing limits on Grantor Retained Annuity Trusts (GRATs). One issue with using measure is the House-passed small business jobs bill includes a similar provision.
Martin Vaughan in an article at nasdaq.com reports a leading House Democrat believes the estate tax will be addressed before the November election as part of dealing with the expiration of the “Bush tax cuts”. He reports that the Senate wants to begin dealing with the issues in June. The article states:
Senate Finance Committee Democrats peppered Baucus with questions at a closed- door meeting this week about when the panel will act on legislation extending the tax cuts, according to some who were present at the meeting. Republican committee members pressed Baucus for action on a permanent fix for the estate tax, at which point several Democrats chimed in saying they felt more strongly that action was needed to extend the middle-class tax cuts.
Congress has a full agenda for the rest of May and likely well into June, as it wrestles with financial regulatory legislation, legislation to extend unemployment benefits and temporary business tax breaks, and an Afghanistan war spending bill.
That means committees will begin work on the tax cuts in late June or July, with final action by the House and Senate not coming until possibly September or October, according to congressional aides.
Van Hollen, an assistant to House Speaker Nancy Pelosi who also chairs House Democrat re-election efforts, strongly asserted that the extension of the tax cuts wouldn’t be saved for a post-election lame duck session.
Some observers of Washington politics speculate that Democrats will attempt to schedule the vote close to the election in order to take credit for cutting taxes on the middle class.
Therefore, at least someone with some power is trying to resolve the estate tax confusion. We shall see.
Heflin’s article is at http://thehill.com/blogs/on-the-money/domestic-taxes/96539-talks-on-estate-tax-advance
Vaughn’s article is at http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201005071458dowjonesdjonline000633&title=pre-election-vote-likely-on-bush-tax-cuts-repvan-hollen#ixzz0nLSHGsiE
By Kevin Staker