WASHINGTON, D.C., June 24 - The Independent Insurance Agents & Brokers of America (IIABA) is hailing House passage of a measure to permanently repeal estate taxes, but also is saying that compromise will be necessary to get reform legislation approved by the divided Senate.
The House of Representatives took a major step toward reforming estate taxes last week when it passed the Death Tax Repeal Permanency Act (H.R. 8), introduced jointly by Reps. Jennifer Dunn (R-Wash.) and John Tanner (D-Tenn.), by a bipartisan vote of 264-163. The measure would permanently extend the total repeal of estate and gift taxes beyond 2011 when a gradual phase-in of repeal would sunset after being in effect for only one year.
Forty-one Democrats and 223 Republicans voted for the bill, sending it to the Senate where the potential for passage is decidedly dim since most Democrats staunchly oppose the legislation on the grounds that it will negatively affect the federal budget. The measure faces the likelihood of a filibuster.
“While we are elated with the House action, we are constantly mindful that the legislation as it currently stands in all probability cannot gain Senate approval,” says IIABA Senior Vice President of Federal Government Affairs Maria L. Berthoud, while also noting that the Big “I” supports total repeal of estate and gift taxes. “To that end, IIABA will work with key congressional leaders to develop an equitable compromise that will respond to the needs and concerns of all involved parties.
Without compromise, nobody wins—not taxpayers and small business owners who will continue to pay hefty tax assessments upon the death of a loved one, and not lawmakers who want to address this issue once and for all,” says Berthoud. “Although independent agents and brokers would much rather have the outright certainty of total and permanent repeal, we would support a legislative proposal that would provide more relief than the status quo and would not sunset at some point in the distant future.”
Under current law, estates worth up to a certain amount are exempt from estate taxes. That amount is currently $1 million for a single person and $2 million for a couple.
A provision providing the total repeal of estate taxes was included as part of the omnibus tax-cut package that was signed into law by President Bush in 2001. However, like all of those tax cuts, the estate tax repeal was not permanent. In fact, total repeal will last for just one year—2011—and will sunset at the end of that year, reverting back to its 2001 levels.
Since the adoption of the Economic Growth and Tax Relief Reconciliation Act of 2001, IIABA, other business groups and numerous members of Congress have been leading the drive to permanently repeal inheritance taxes.
“The potential sunset of the estate tax provision is the most troubling of all the tax cuts in the Economic Growth and Tax Relief Reconciliation Act of 2001 because it makes it extremely difficult for most Americans to conduct estate planning with so much uncertainty surrounding the law,” says IIABA CEO Robert A. Rusbuldt. “IIABA has pushed hard to make this tax change permanent because the death tax results in unfair double taxation of income and hurts America’s small businesses, which are the engine of job creation.
“That’s why finality is so imperative. Business owners cannot adequately prepare for the transition of their business to their heirs if they do not know the substance of estate tax laws beyond 2011,” asserts Rusbuldt. “Congress must provide them certainty and IIABA stands ready to talk with any and all lawmakers to hammer out an agreement that will provide measurable relief to taxpayers and also gain the approval of both chambers.”
Founded in 1896, IIABA is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, health, employee benefit plans and retirement products. Web address: www.independentagent.com.