Seniors Legacy Foundation

Death Tax Repeal Permanency Act – HR 1259

administrator — Mon, 13 Feb 2012 16:46:22 +0000

February 13, 2012

Bi-partisan federal estate tax repeal legislation has been introduced in Congress and is expected to pass in the House of Representatives with a strong majority. H.R. 1259, the Death Tax Repeal Permanency Act, is sponsored by Representative Kevin Brady (R-TX-8) and cosponsored by a growing list of supporters which includes Blue Dog Caucus Chairman Representative Mike Ross (D-AR-4) and Dan Boren (D-OK-2).

The federal estate tax is temporarily set at a rate of 35% with a $5 million exemption, due to legislation passed in December, 2010. The tax was repealed in 2010 due to the 2001 tax cuts. That legislation was not permanent and the tax was scheduled to be reinstated at the rate of 55% on all assets above a $1 million exemption on January 1, 2011.

Congress passed H.R. 4853, the Middle Class Tax Relief Act, and temporarily set the tax at its current rate. This legislation will expire at the end of 2012 and the death tax will return to 55% with a $1 million exemption on January, 1, 2013, unless Congress acts to permanently repeal the tax.

The good news is that a majority of the House of Representatives support permanent death tax repeal. On November 2, 2010 131 signers of the Death Tax Repeal Pledge won their election to U.S. Senate and House. These candidates, along with other identified supporters in each branch of Congress, will lead the charge for permanent repeal.

The bad news is that the White House and current Senate leadership continues to ignore the research showing that reinstating the death tax at any level is bad for small businesses and farms, jobs, and even federal revenue. They also ignore the polls which show that two-thirds of the American people support permanent repeal.

http://www.nodeathtax.org/deathtax/currentfight

Republican Presidential Candidates Agree: Kill the ‘Death Tax’

administrator — Tue, 17 Jan 2012 00:31:05 +0000

Posted January 16. 2012

By Sean Parnell

Sean Parnell is the president of Impact Policy Management (IPM)

As candidates for the 2012 Republican nomination spar over differences on health care policy, job growth, and the war on terror, a consensus has emerged on at least one issue: repeal of the federal estate tax, commonly referred to as the ‘death tax.’

All of the major Republican candidates except former Utah Gov. Jon Huntsman and former Louisiana Gov. Charles ‘Buddy’ Roemer have signed a pledge committing themselves to repeal of the estate tax. The pledge was created by the American Family Business Institute (AFBI), a national advocate of repealing the estate tax.

Huntsman and Roemer do support eliminating the estate tax, but as a matter of policy do not sign pledges on any issues, according to AFBI president Dick Patten.

Likely Campaign Issue

The unanimous agreement among Republicans that the estate tax should be repealed stands in contrast to President Obama, who favors keeping it. This makes it likely the estate tax will be an issue in the 2012 contest between President Obama and whoever emerges as his Republican opponent.

“With jobs being a major focus of the 2012 election campaign, and three separate studies showing the job-growth benefits of eliminating the death tax, you have to figure this is going to be part of the campaign,” said Patten. He cited estimates from the studies showing between 1.5 million and 2 million jobs could be created if the estate tax were permanently repealed.

The first estate tax was imposed to help pay for the Civil War. It was repealed in 1870, revived during the Spanish-American War and repealed in 1902 after the end of that conflict. The modern estate tax was established in 1916 alongside the income tax, and quickly raised in 1917 to help pay for World War I.

The Civil War and Spanish-American War estate tax rates ranged between .75 percent and 15 percent, much lower than today’s rates. By 2001, the highest rate was 60 percent. Rates were lowered under the Economic Growth and Tax Relief Reconciliation Act signed by President Bush in 2001, gradually falling to 45 percent in 2007 before being eliminated in 2010. An increase in the amount that could be exempted was also included in the 2001 legislation.

Due to Congressional budgeting rules, the complete repeal was for only 2010, and the tax was scheduled to return to 55 percent in 2011. As part of a compromise with Republicans, in December 2010 President Obama signed legislation setting the estate tax rate at 35 percent, while also increasing the amount that could be exempted from tax. The lower rates are temporary, however, and in 2013 the estate tax is again scheduled to rise to 55 percent and the exemption to drop to $1 million.

Benefit for Jobs, Economy

Several studies have shown that elimination of the inheritance tax could benefit job creation. “Growth Consequences of Estate Tax Reform: Impacts on Small and Family Businesses,” a September 2010 report by former Congressional Budget Office Director Douglas Holtz-Eakin, found that allowing the estate tax to rise to 60 percent would result in up to 1.5 million jobs being lost, and even a modest rate of 15 percent would lead to up to 350,000 jobs being lost.

A 2006 report by the Joint Economic Committee of Congress – “Costs and Consequences of the Federal Estate Tax” — further documented the negative impact of the estate tax on the economy.

“Survey data suggest that the estate tax continues to be a primary reason why small businesses fail to survive beyond one generation,” according to the report. Close to two-thirds (64 percent) of respondents in one survey of family businesses reported that the estate tax makes survival of the business more difficult.”

Supporters of keeping the estate tax largely focus on revenue to the government at a time of budget deficits, as well as the fact that relatively few estates wind up having to pay the tax.

In May 2011, Gillian Brunet of the Center for Budget & Policy Priorities wrote the tax-cut compromise enacted the prior December would cost the federal government “about $23 billion more than reinstating the 2009 rules … yet will benefit only the largest one-quarter of 1 percent of estates” because they are the only ones that that would owe any estate tax.

Estate Planning Costs

Brunet’s analysis ignores the expense of estate planning and the job-killing effects of the tax, say advocates of repeal. According to AFBI, the inheritance tax imposes a burden well beyond one quarter of one percent of estates because it forces “business owners to use complex tax planning strategies to reduce their estate tax liability… but the resulting compliance costs (such as paying for an accountant or attorney, purchasing life-insurance, and otherwise misallocating capital) impose a heavy financial burden.”

Several bills to repeal the tax are in Congress, including one each by Republican presidential contenders Michelle Bachman and Ron Paul.

Sean Parnell (parnell001@hotmail.com) is a Heartland Institute policy adviser and writes from Alexandria, Va.

http://news.heartland.org/newspaper-article/2011/09/29/republican-presidential-candidates-agree-kill-death-tax

What is the Future of the Federal Estate Tax?

administrator — Tue, 17 Jan 2012 00:15:17 +0000

Predictions About the Future of Estate Taxes

Posted January 16, 2012

By Julie Garber

While we know what the federal estate tax rules will be for 2012, what will happen in 2013 and beyond is really up in the air. Under current law the estate tax exemption is scheduled to drop significantly from $5,120,000 in 2012 to $1,000,000 in 2013, and the estate tax rate is scheduled to jump from 35% to 55%.

That’s right – while the federal estate tax exemption was set at $5,000,000 and the estate tax rate was set at 35% for the 2010 and 2011 tax years, and the exemption increased to $5,120,000 for 2012, on January 1, 2013 the exemption and rate are scheduled to revert back to the numbers that were in effect in 2001/2002 – meaning, as mentioned above, a $1,000,000 estate tax exemption and 55% estate tax rate.

But with Republicans having taken over a majority in the House of Representatives and gaining significant ground in the Senate, what will be the future of the federal estate tax in 2013 and beyond?

Will Anything Happen With the Estate Tax Before the End of 2012?

During the months preceding the 2008 election, then Senator Obama was against full repeal of the federal estate tax and instead favored a $3,500,000 exemption and 45% tax rate, which happen to be the exact same numbers that took effect in 2009. (For the sake of comparison, John McCain favored a $5,000,000 exemption and 15% tax rate). In fact, during his campaign, Obama supported making the 2009 numbers permanent in 2010 and beyond.

Nonetheless, in early December 2010 President Obama and Senate Republican leaders reached an agreement on the estate tax rules for 2010, 2011 and 2012. Under the provisions of the Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of 2010¹ (“TRUIRJCA” for short), the estate tax exemption was set at $5,000,000 for 2010 and 2011, indexed for inflation in 2012 which resulted in the current $5,120,000 exemption, and the estate tax rate was set at 35%. Of significance is the fact that prior to the enactment of TRUIRJCA on December 17, 2010, House Democrats strongly voiced their opposition to the significant bump in the estate tax exemption and decrease in the estate tax rate and even tried to pass a bill that would have reinstated the 2009 exemption and rate, but to no avail.

So what will happen with the federal estate tax during the next few years? In 2011 there were a significant number of bills introduced in the House that called for complete repeal of the tax:

Jan. 14, 2011 – Count ‘Em Up, Five Bills Already Introduced to Repeal Estate Taxes²
April 4, 2011 – H.R. 1259 – Bipartisan Bill to Permanently Repeal Federal Estate Tax Introduced in the House³
May 31, 2011 – Revisiting H.R. 1259, The Bipartisan Death Tax Repeal Permanency Act⁴

And during the summer of 2011 there was speculation that the Senate was working on a compromise to permanently set the estate tax exemption at $5,000,000 and the estate tax rate somewhere between 35% and 45%:

June 8, 2011 – Is a Senate Estate Tax Compromise in the Works? I Doubt It…⁵

As I suspected, this rumor went nowhere fast.

And then in the fall of 2011 there were rumors circulating that the Super Committee would propose rolling the estate tax and gift tax exemptions and rates back to 2009 levels:

Nov. 7, 2011 – Will the Super Committee Propose Estate Tax and Gift Tax Changes?⁶

As we know now, the Super Committee fell flat on its face on all fronts.

And then right on the heels of the Super Committee rumors, Rep. Jim McDermott (D-WA) introduced the Sensible Estate Tax Act of 2011, which would have set the estate tax exemption at $1,000,000 but as indexed for inflation starting with the year 2000, set the estate tax rate at 55%, and made portability of the estate tax exemption between spouses⁷ permanent:

Nov. 28, 2011 – More on H.R. 3467, The Sensible Estate Tax Act of 2011⁸

That bill promptly fell flat on its face.

And now that the search for the Republican presidential candidate is in full swing, it should be noted that all of the major Republican candidates want the federal estate tax to be repealed:

Dec. 19, 2011 – What Do the 2012 Republican Presidential Candidates Think About the Federal Estate Tax?⁹

What Are Congress’s Estate Tax Options?

Nonetheless, as in previous years, and particularly since this is a presidential election year, members of Congress will surely continue to drag their feet and then wait until the very last minute to act to head off the expiration of TRUIRJCA, or perhaps not act at all. With that said, there are currently five different paths for Congress to take during 2012:

Do nothing. The first option is for Congress to do nothing and allow TRUIRJCA to expire as it is scheduled to do on December 31, 2012. If this happens, then a $1,000,000 estate tax exemption and 55% estate tax rate will kick in on January 1, 2013.
Extend TRUIRJCA. The second option is for Congress to extend TRUIRJCA for 2013 and beyond. This would mean that the estate tax exemption would be indexed for inflation above the $5,120,000 exemption that has gone into effect in 2012 and the estate tax rate would remain at 35%.
Pass a compromise bill. The third option is for Congress to pass some form of an estate tax compromise which will lower the estate tax exemption and increase the estate tax rate to something more in line with the 2009 numbers of $3,500,000 and 45%. This may also include repeal of portability of the estate tax exemption between spouses which is in effect for the 2011 and 2012 tax years.
Repeal the estate tax. The fourth option is for Congress to completely repeal the federal estate tax. This is a real possibility since Republicans are in control of the House and a substantial number of congressional Republicans favor full repeal of the estate tax. Couple this with the significant number of bills that were circulated in the House in 2011 that called for full repeal, with one bill being bipartisan and having 193 co-sponsors, and the possibility of repeal has never been greater.
Throw in a wild card. The fifth option is for Congress to do something new and different that is not listed above. I call this wild card option the “your guess is as good as mine” option.

What Does the Estate Tax Straw Poll Show?

Back at the beginning of 2011 I posted an “Estate Tax Straw Poll” which posed the question, What do you think Congress will do with the federal estate tax for 2013 and beyond? The straw poll offers five answers to choose from which coincide with the five options listed above.

So what do those who have voted in the poll think? Currently option #2, extend TRUIRJCA, has a significant lead over the other options, and this has in fact been the trend during the entire time the poll has been posted.

To vote in the Estate Tax Straw Poll, follow this link: New Estate Tax Straw Poll – Cast Your Vote! – What Do You Think Congress Will Do With Estate Taxes for 2013 and Beyond?¹⁰

To view the current straw poll results, follow this link: Current Results¹¹.

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Warren Buffett’s Death Tax Hypocrisy

administrator — Tue, 06 Dec 2011 02:13:53 +0000

By Ryan O’Donnell
December 5, 2011 (originally published, August 18, 2010)

In many respects, Dan L. Duncan was the embodiment of the American dream, the self-made man incarnate. He transformed $10,000 and two propane trucks into a natural gas empire and a personal net worth of $9 billion—making him the richest person in Houston, and the 74th wealthiest individual in the world.

Even though Duncan died last March, his story provides the “only in America” narrative that seems to be lacking in this brave new era of big government and dwindling faith in the individual.

And yet, incredibly, Duncan was recently profiled in The New York Times, not for his entrepreneurial spirit, but his ability to avoid paying taxes—by dying. In fact, the Times managed to parlay Duncan’s story into a none-too-subtle hustle for passage of the death tax. In an amazing uncomfortable piece of prose, the article actually makes the point that, because Duncan died when he did, his “four children and four grandchildren stand to collect billions that in any other year would have gone to the Treasury.”

The Times’ subtext is clear: Had Duncan had the decency to die three months earlier, the state would have received its rightful tithe. Sure, such insinuation ignores the fact that Duncan’s heirs don’t get away tax-free. In fact, enormous amounts of tax, including capital gains tax on all the assets they receive, is almost as much, if not equal to, the amount they would have paid under the death tax. But why let facts drag down the sexier narrative of capitalist greed?

The article also includes a quote from Chuck Collins, an “income inequity” specialist and pro-death tax advocate who has worked with
Warren Buffett as well as Bill Gates to advance the death tax agenda: “The ultra-wealthy in this country will still be able to pass on enormous wealth to the next generation.” After all, argues Collins, the death tax is merely “a recycling program for economic opportunity.”

It’s misleading, however, to cite Buffett’s support for the death tax as evidence that the “oracle from Omaha” is some rare breed of enlightened capitalist who has no problem with giving a huge chunk of his fortune back to the state.

Buffett’s support for the death tax is hardly altruistic. Dick Patten, executive director of the American Family Business Institute, writes: “In the process of building his company, Berkshire Hathaway, Mr. Buffett benefited tremendously from death tax. In fact, the tax is critical to two of the three legs that make up Mr. Buffett’s financial stool.”

There’s absolutely nothing wrong with that; just because the death tax is poor public policy doesn’t mean that entrepreneurs shouldn’t be able to take advantage of the opportunities it presents. What is problematic, however, is when death-tax advocates cite Warren Buffett’s support for the death tax as evidence vindicating their crusade against income inequality.

Buffett doesn’t worry about the death tax’s effect on the deficit or income inequality; he cares about the fact that, as Grover Norquist pointed out, if “the death tax goes away for good, so does much of Buffett’s wealth. He’s doing everything he can to make sure the death tax comes back in full force.”

Besides, Buffett is already planning to transfer a large majority of his considerable wealth to a charitable foundation (The Bill and Melinda Gates Fund) upon his death, thereby ensuring Treasury never gets a hold of his fortune. Buffett also plans to give a portion of his remaining fortune to other foundations run by his three children—a savvy method of avoiding the death tax while ensuring his heirs’ financial well-being. Not a bad set-up and one that must make it pretty easy to assume the public role of mogul-cum-martyr.

All and all, the death tax has treated Warren Buffett pretty well—no wonder he is so excited about its potential resurrection.

As for Collins’ defense of the death tax, it’s hard to even know where to begin. He trots out the tired “ultra-wealthy” adjective, which is clearly intended to be, if not pejorative, at least less-than-flattering—men like Duncan aren’t simply successful, they are something else, therefore making it acceptable to subject them to higher tax rates. And because these “ultra-wealthy elites” will still be able to pass on “enormous wealth,” they shouldn’t care that they are being treated unfairly.

Of course, the definition of enormous wealth is subjective anyway. One suspects that, were Collins ever to achieve the levels of prosperity earned by Duncan, his view on the amount of that wealth that should revert to the federal government might change.

The most troubling aspect of the left’s entire approach toward not only the death tax, but taxes in general, is surmised in Collins’ assertion that the death tax is, at its core, “a recycling program for economic opportunity”—and the implicit suggestion that such a program justifies income redistribution. It’s not Duncan’s money; it’s the Treasury’s to take back and spread around the rest of society as the federal government sees fit.

Its awkward treatment of Duncan aside, the Times’ piece serves primarily to remind readers that the left’s obsession with income distribution and class warfare continues to obscure the truth about the death tax: it slows economic growth, destroys jobs, and suppresses wages because it is a tax on capital and entrepreneurship.

In order to ensure that this nation continues to produce success stories like that of Dan Duncan, it’s time for Congress to permanently repeal the death tax.

Ryan O’Donnell is a reporter for the Center for Media and Public Policy
at The Heritage Foundation.

Economists Continue to Call for the Repeal of the Death Tax

administrator — Mon, 24 Oct 2011 14:29:18 +0000

By Peter Roff

October 21, 2011

The effort to permanently repeal the federal death tax is still very much alive.

The issue has been given new life by a letter released earlier this week by more than 250 prominent economists including several Nobel laureates, several former Federal Reserve Bank presidents and presidential economic advisers from the Kennedy, Ford, Reagan, and George W. Bush administrations.

The letter was issued to commemorate one written 10 years ago by the late economist and Nobel Laureate Milton Friedman who, with the support of more than 275 fellow economic theorists, argued the federal death tax ties up capital, punishes saving and investing, fails to raise substantial revenue, and actually increases economic inequality.

[See a collection of political cartoons on the budget and deficit.]

At the same time the American Family Business Foundation released a study showing that federal death tax repeal would do more to reduce the deficit than increasing the tax, generating enough new revenue to cover just over 30 percent of the $1.2 trillion in deficit reduction required by 2021.

The study was conducted by Stephen J. Entin, a former deputy undersecretary of the Treasury who is now president of Institute for Research on the Economics of Taxation, and a former deputy undersecretary of the Treasury.

Support for higher estate taxes in the name of increasing government revenues or reducing deficits is based on the unrealistic theory that every dollar not collected by the Treasury is a dollar lost—or what economists dub static losses, Entin explains. In the real economy, however, that same dollar, if not claimed by government, is often invested in new equipment, employees, or technology intended to increase a company’s revenue.

[Check out a roundup of editorial cartoons on the economy.]

“This dynamic method demonstrates that the estate tax reduction would significantly lower, not raise, the federal deficit, and shows that the potential gains in GDP are substantial,” Entin said.

When compared to the various estate tax rate and exemption combinations being recommended by members of Congress, Entin calculates that repeal is by far the best policy option. Across a 10-year budget window—2012 to 2021—he finds that repeal of the federal estate tax would:

Cover 30.18 percent of the $1.2 trillion in deficit reduction required of the Super Committee by 2021
Reduce the total budget deficit by 5.19 percent over the period and by 11.49 percent in 2021
Lead to a 2.26 percent increase in GDP ($538 billion) by 2021, for a cumulative gain of nearly $3 trillion over the period, compared to what would have happened under current law
Increase federal revenues over the 10-year period by about $362 billion (compared to current estate tax law); by 2021 the annual gain would be about $88 billion per year

According to AFBF President Dick Patten, whose group commissioned the study, “Elimination of the estate tax is as close as one gets to a free lunch in economics. It is time to take advantage of it.”

http://www.usnews.com/opinion/blogs/peter-roff/2011/10/21/economist-continue-to-call-for-the-repeal-of-the-death-tax

President Addresses Estate Tax on Bus Tour

administrator — Fri, 16 Sep 2011 20:53:40 +0000

At the final stop of his economic bus tour in Alpha, Illinois, the President fielded a question on August 17 from a family farmer concerned about the potential return of a higher estate tax in 2013:

Farmer: Thank you, Mr. President, for being here today in Henry County. My name is Karen Urich. I’m a multigenerational farmer, member of the Henry County Board and Henry County Farm Bureau. My question that I have today is I have a concern over estate taxes. In 2013, if the Senate and the Congress fails to act, we will have our estate taxes go back to the 2001 level. We have family farms that are experiencing having to sell their land in order to pay the property taxes. And I was wondering what you see for the future of the estate tax. Thank you.

President: Well, there’s no reason why we have to go all the way back to the 2001 level. There is a compromise that has been discussed where you’d essentially have a $7 million exemption per family. There are some folks who just want to eliminate the estate tax altogether. There are others who want to hike it up back to 2001. There’s a mid-level proposal that would exempt most – almost all – family farms and nevertheless would still hit folks like Warren Buffett and make sure that he is able to pay what he wants to pay in terms of passing on something not only to his family, but also to the country that has blessed him so much. So this is going to be part of the larger debate we have about the tax code.… (more at http://whitehouse.blogs.cnn.com/2011/08/17/obama-talks-estate-tax-at-final-bus-tour-stop/).

When Congress considers an extension of the 2010 Tax Act, which is currently unlikely to be a part of the joint committee’s deficit reduction effort in 2011 but is expected to be a key focus in 2012, the President and leading Democrats intend to press for a return to 2009 parameters (higher 45% rate and lower $3.5 million exemption).

Many Republicans and a few Democrats seek to fully repeal the tax. While such a proposal could pass the House, it stands extremely little chance of being signed into law during the 112th Congress. If nothing happens, the tax will skyrocket to a 55% rate on all assets over $1 million.

Policy and Taxation Group continues to argue that the middle ground is not increasing estate tax burden on struggling family businesses, but improving on the 2010 Tax Act – at the minimum protecting and building upon the current middle ground of a 35% rate and $5 million exemption indexed for inflation. In the previous overwhelmingly Democratic-controlled Congress, both chambers went on record expressing their preference for 35/5 as opposed to 45/3.5. Policy and Taxation Group will continue to press to move the center of the debate in the right direction to increase the prospects for sustainable estate tax relief.

http://www.policyandtaxationgroup.com/html/blog/PresidentAddressesEstateTaxBusTour.html

Majority of Republican Presidential Candidates Sign Death Tax Repeal Pledge

administrator — Mon, 15 Aug 2011 23:09:40 +0000

August 11th, 2011 WASHINGTON, DC

On the eve of the Ames Straw Poll, nearly all of the 2012 Republican Presidential candidates have signed a pledge endorsing permanent repeal of the Federal Estate Tax, the American Family Business Institute (AFBI) announced today. The tax is currently set at 35 percent on all assets above $5 million and will increase to 55 percent on everything above $1 million starting January 1, 2013, making the future of the death tax an important issue during the current campaign season. “Ten of the 12 leading Republican Presidential candidates agree: the rate ought to be zero. Permanently,” said AFBI President Dick Patten. The pledge, organized by AFBI, has been signed by (in alphabetical order): Michele Bachmann; Herman Cain; Newt Gingrich; Gary Johnson; Thaddeus McCotter; Ron Paul; Tim Pawlenty; Rick Perry (poised to enter the race in coming days); Mitt Romney and Rick Santorum. Both Charles Roemer and Jon Huntsman have declined to sign the pledge (both decline all pledges). President Obama continues to support a permanent death tax of 45 percent. “The candidates who support repeal get it: Taxing Americans at death is the wrong policy to push when the country is in dire need of new jobs, which are created by the small and family businesses that are most susceptible to the death tax,” said Patten. “Repealing the death tax is the common sense policy for serious candidates.” For a complete list of Death Tax Repeal Pledge signers, visit: http://www.nodeathtax.org/deathtax/currentfight/2012-republican-presidential-candidates

Boehner Abandons Efforts to Reach Comprehensive Debt-Reduction Deal

administrator — Wed, 13 Jul 2011 17:22:52 +0000

By Paul Kane and Lori Montgomery, Published: Washington Post July 9, 2011

House Speaker John A. Boehner abandoned efforts Saturday night to cut a far-reaching debt-reduction deal, telling President Obama that a more modest package offers the only politically realistic path to avoiding a default on the mounting national debt. On the eve of a critical White House summit on the debt issue, Boehner (R-Ohio) told Obama that their plan to “go big,” in the speaker’s words, and forge a compromise that would save more than $4 trillion over the next decade, was crumbling under Obama’s insistence on significant new tax revenue.

“Despite good-faith efforts to find common ground, the White House will not pursue a bigger debt reduction agreement without tax hikes,” Boehner said in a statement released less than 24 hours before the White House meeting was scheduled to begin. “I believe the best approach may be to focus on producing a smaller measure, based on the cuts identified in the Biden-led negotiations, that still meets our call for spending reforms and cuts greater than the amount of any debt limit increase.”

Boehner’s decision leaves negotiators reexamining a less-ambitious framework — aimed at saving roughly $2.4 trillion over the next decade — that had been under discussion between Vice President Biden and a bipartisan group of lawmakers. But that framework is hardly complete; the group broke up last month when Republicans walked out over the tax issue. The sweeping deal Obama and Boehner had been discussing would have required both parties to take a bold leap into the political abyss.

Democrats were demanding more than $800 billion in new tax revenue, causing heartburn among the hard-line fiscal conservatives who dominate the House Republican caucus. Republicans, meanwhile, were demanding sharp cuts to Medicare and Social Security, popular safety net programs that congressional Democrats have vowed to protect. Obama, at least, was willing to make that leap and had put significant reductions to entitlement programs on the table.

But on Saturday, Boehner blinked: Republican aides said he could not, in the end, reach agreement with the White House on a strategy to permit the Bush-era tax cuts for the nation’s wealthiest households to expire next year, as lawmakers undertook a thorough rewrite of the tax code. Democrats quickly accused Boehner of placing tax breaks for the rich above the nation’s financial salvation. “We cannot ask the middle-class and seniors to bear all the burden of higher costs and budget cuts. We need a balanced approach that asks the very wealthiest and special interests to pay their fair share as well, and we believe the American people agree,”

White House communications director Dan Pfeiffer said in a statement. “Both parties have made real progress thus far, and to back off now will not only fail to solve our fiscal challenge, it will confirm the cynicism people have about politics in Washington.” The Sunday meeting at the White House will go on as scheduled, and Pfeiffer said Obama will continue to press for a broad deal aimed at stabilizing the soaring national debt. Without such a plan, lawmakers in both parties have said they will not vote to grant the U.S. Treasury additional borrowing authority. Unless Congress acts to raise the $14.3 trillion legal limit on the debt, Treasury Secretary Timothy Geithner has said that the government will begin to default on its obligations after Aug. 2.

The Biden framework, which he crafted with key Republicans, including House Majority Leader Eric I. Cantor (R-Va.), includes cuts to federal agency budgets and more modest changes to government health programs. It would not tackle the rising cost of Social Security. Negotiators had managed to reach tentative agreement on only about $1.5 trillion in savings, according to aides in both parties — short of the $2.4 trillion Boehner is demanding in exchange for an increase in the debt ceiling that would pay the nation’s bills through spring 2013.

Ironically, it was Boehner who cajoled Obama into pushing for the big deal. His Saturday night announcement capped a whirlwind courtship between the two men, beginning with a casual round of golf at Andrews Air Force Base on June 18. A series of secret meetings followed, culminating in a decision to push for a landmark debt-reduction deal. Both leaders believed that divided government — with Republicans in charge of the House and Democrats holding the Senate and the presidency — might provide an opportunity to demonstrate that bipartisan cooperation was still possible on a grand scale.

A deal to slice more than $4 trillion in borrowing over 10 years would be, by far, the largest debt-reduction package in at least two decades. The plan would have struck at all the major drivers of government spending, from Social Security and Medicare to the Pentagon. The emerging deal, however, quickly appeared to be collapsing under its own ideological weight. Liberals were outraged by Obama’s offer to rein in entitlement spending, particularly Social Security, which congressional Democrats believed would not be a part of the debt-reduction effort. The White House had offered to change the measure of inflation used to calculate Social Security payouts, a shift that could save more than $100 billion over the next decade, according to congressional budget analysts.

Conservatives, meanwhile, were uniformly opposed to raising taxes. That resistance has proved to be the biggest obstacle to a compromise of any size. In private negotiations with the White House last week, Boehner dangled a tax deal that he thought might bridge the divide. Republicans would immediately extend the Bush tax cuts for middle-class households, leaving the cuts that benefit the nation’s wealthiest taxpayers on track to expire next year.

That would have been a huge win for Democrats, whose liberal base views ending tax cuts for the rich as a top priority — and one that Obama has failed to deliver. Democrats, in turn, would agree to a rewrite of the tax code by the end of the year, to lower rates for everyone, a top GOP priority. As recently as Friday, the speaker’s office and the White House were trading proposals, trying to reach agreement before the Sunday meeting with other top congressional leaders.

People in both parties said talks broke down over tax reform: On Friday, the White House said changes in tax law must not shift the tax burden more heavily onto households earning less than $250,000 a year. After that, suddenly things went dark, said an administration official, speaking on the condition of anonymity to discuss private negotiations. Some Republican aides said the deal was simply not good enough, in part because Obama refused to cut entitlement programs deeply enough to restore them to solvency. They also complained that, as part of a mechanism to force lawmakers to overhaul the tax code, the president wanted a trigger that would automatically raise taxes if tax legislation was not enacted by the end of this year.

But other Republicans said Boehner had finally realized that he could not sell the tax framework within his party. Many House Republicans, particularly the influential 87-member freshman class, won elections vowing to never raise taxes. At a Thursday meeting at the White House, Cantor said the tax package could not pass the House. And at a Friday morning news conference, every member of Boehner’s leadership team denounced the idea of including tax increases in the debt legislation.

Meanwhile, Republican presidential candidates have been putting additional pressure on Boehner. Rep. Michelle Bachmann (R-Minn.) vowed in her first campaign ad to never vote for any debt-ceiling increase, no matter what provisions were attached to it. On Saturday, top Republicans offered tepid support for Boehner’s decision.

Don Stewart, spokesman for Senate Minority Leader Mitch McConnell (R-Ky.), said McConnell, too, “remains concerned with the Democrats’ unwillingness to take steps to protect entitlement programs from bankruptcy.” Cantor spokesman Brad Dayspring said in a statement: “The tax increases that the Democrats are insisting upon cannot pass the House and are the last thing Congress should do with so many people out of work.

Eric has always believed the Biden group identified between $2 and $2.5 trillion in spending cuts that could represent the framework for an agreement.” Boehner’s announcement makes the Sunday evening White House summit all the more critical, as Obama, Biden and congressional leaders must quickly formulate a new plan for avoiding default. Senate Majority Leader Harry Reid (D-Nev.) has said a deal must be sealed by the end of this week to leave sufficient time for Congress to pass it. Though widely hailed as extremely productive, the Biden group also encountered major obstacles.

The Biden package so far involves more than $1 trillion in cuts to government agencies, about $200 billion in reductions to Medicare and Medicare, and another $200 billion from other direct-payment programs, such as farm subsidies and federal employee pensions. It would not touch Social Security, in deference to Democratic demands. The Biden negotiators were stymied, however, over the issue of revenue. Obama had proposed an increase of more than $400 billion, including new limits on deductions for the wealthy and elimination of a raft of corporate tax breaks benefiting hedge fund managers and corporate jet owners, among others. Cantor and other Republicans refused to consider closing any tax breaks unless they were offset by tax cuts elsewhere. The group was also fighting over Democratic demands for a “firewall” between domestic and military spending that would guarantee that the Pentagon absorbed its share of the fiscal pain.

H.R. 1259 – Bipartisan Bill to Permanently Repeal Federal Estate Tax Introduced in the House

administrator — Tue, 31 May 2011 16:04:26 +0000

On March 30, H.R. 1259, “The Bipartisan Death Tax Repeal Permanency Act,” was introduced in the U.S. House of Representatives by Rep. Kevin Brady (R – TX). At a press conference, Brady stated, “The death tax is still the number one reason family farms and businesses in America aren’t passed down to the next generation. It’s the wrong tax at the wrong time and it hurts the wrong people.”

The bill is called “bipartisan” because it currently has six co-sponsors, two Democrats and four Republicans: Rep. Dan Boren (D – OK), Rep. Lynn Jenkins (R – KS), Rep. Walter Jones (R – NC), Rep. Kristi Noem (R – SD), Rep. Devin Nunes (R -CA), and Rep. Mike Ross (D – AR).

The bill, which would become effective on the date of enactment, provides for the following:

Repeal of the federal estate tax.
Repeal of the federal generation-skipping transfer tax.
Extension of the current $5 million lifetime gift tax exemption and 35% gift tax rate.

According to Rep. Brady, while he believes that there will be strong support for H.R. 1259 in the House, he sees a fight in the Senate. Nonetheless, Brady wants to push for a debate over the future of the federal estate tax sooner rather than later: “I can tell from having almost let the clock run out last Christmas time that there were real problems created by the lateness of Congress to act on this issue. [You think?!] So we are going to encourage both the House and Senate to move as quickly as possible on this to create that certainty for farmers and businesses.”

As usual I won’t be holding my breath, although I still think that the federal estate tax will be repealed for 2013 and beyond even though the results of my latest estate tax straw poll show that the majority of voters disagree with me: New Estate Tax Straw Poll – Cast Your Vote! – What Do You Think Congress Will Do With Estate Taxes for 2013 and Beyond?

http://wills.about.com/b/2011/04/04/h-r-1259-bipartisan-bill-to-permanently-repeal-federal-estate-tax-introduced-in-the-house.htm

2011 Congressional Legislative Review

administrator — Tue, 31 May 2011 16:00:23 +0000

FY 2010 Budget Resolution (Conference Report to Accompany S. Con. Res. 13) passed the House 233-193 and the Senate 53-43 on April 29, 2009. The budget assumes a freeze of the estate tax at the current 45% rate and $3.5 million exemption.

Lincoln/Kyl Compromise, offered as an amendment (SA 873) to the Senate Budget Resolution (S. Con. Res. 13), was agreed to by a vote of 51-48 on April 2, 2009 and later dropped in conference committee. All 41 Republicans and 10 Democrats voted YES, including Senators Blanche Lincoln (AR), David Pryor (AR), Bill Nelson (FL), Evan Bayh (IN), Mary Landrieu (LA), Max Baucus (MT), Jon Tester (MT), Ben Nelson (NE), Maria Cantwell (WA) and Patty Murray (WA). The amendment would have created a deficit neutral reserve fund to make the estate tax permanent by lowering the rate to 35%, increasing the exemption to $5 million indexed for inflation, reunifying estate and gift taxes and providing for spousal portability. The proposal would not have included deductibility for state estate taxes. PATG supported this amendment.

Durbin Amendment (SA 974), offered to the Senate Budget Resolution (S. Con. Res. 13) immediately following the Lincoln/Kyl Compromise, was agreed to by a vote of 56-43 and later dropped in conference committee. All 41 Republicans and 2 Democrats voted NO, including Senators Bill Nelson (FL) and Mary Landrieu (LA). The amendment would have raised a point of order against any estate tax relief better than a freeze of current law unless an equal amount of tax relief was also provided for individuals earning less than $100,000 per year. PATG opposed this amendment.

Representative John Salazar’s (D-CO) H.R. 173 would exclude from the gross estate of a decedent the value of farmland used by an heir for farming purposes.

Representative Mac Thornberry’s (R-TX) H.R. 205 would repeal federal estate and gift taxes.

Representative Earl Pomeroy’s (D-ND) H.R. 436 would make the estate tax permanent by freezing the rate at 45% and exemption at $3.5 million, apply a 5% surtax to estates over $10 million and disallow valuation discounts for certain family-owned entities. PATG opposes this legislation.

Representative Harry Mitchell’s (D-AZ) H.R. 498 would reduce the estate tax rate to 15% for estates under $25 million and 30% for estates over $25 million, phase in a $5 million exemption indexed for inflation, reunify estate and gift taxes, provide for spousal portability and eliminate the state estate tax deduction.

Representative Jim McDermott’s (D-WA) H.R. 2023 would make the estate tax rate permanent at 45% for estates up to $5 million, 50% for estates over $5 million and 55% for estates over $10 million and reduce the exemption to $2 million indexed for inflation. PATG opposes this legislation.

Representative Kevin Brady’s (R-TX) H.R. 3463 would permanently repeal the estate tax. PATG supports this legislation.

Representative Mike Thompson’s (D-CA) H.R. 3524, introduced with Representative John Salazar (D-CO) would exclude certain farmland, which is in continuous use for agriculture or horticulture, from the value of estates.

Representative Shelley Berkley’s (D-NV) H.R. 3905, introduced with Representatives Kevin Brady (R-TX), Artur Davis (D-AL) and Devin Nunes (R-CA), would, over ten years, permanently lower the estate tax rate to 35%, increase the exemption to $5 million indexed for inflation and eliminate the state estate tax deduction. PATG supports this legislation.

Senator Max Baucus’s (D-MT) S. 722 would make the estate tax permanent at a 45% rate and $3.5 million exemption indexed for inflation, reunify estate, gift and generation-skipping taxes, provide spousal portability, improve special use valuations and retain stepped-up basis and deductibility of state estate taxes.