May 31, 2005

ESTATE TAX REPEAL LEGISLATION

S. 988 was introduced by Senator Jeff Sessions (R-AL) to repeal the estate and generation-skipping transfer taxes retroactively to January 1, 2005. This currently has 25 co-sponsors.

Senator Jon Kyl (R-AZ) has introduced legislation to make the estate tax repeal permanent after 2010. Currently, the law repeals the estate tax in 2010 and would have the tax reappear in 2011 unless further action is taken by Congress between now and 2010. Use the following link to see the phase-out of the estate tax under current law: Death Tax Exemptions and Estate & Gift Tax Tables.

The above two pieces of legislation are not up for a vote any time soon. However, the House introduced legislation in April, H.R. 8, that would repeal the estate tax permanently after 2010, similar to Senator Kylâs proposal above. This bill passed the House by a vote of 272-162 and the Senate is hinting it may be up for a vote in that body this June.

Keep in mind the House has passed an estate tax repeal bill in every Congress since 2000. Given the budget constraints, it may be difficult to gather the necessary votes in the Senate to permanently repeal the estate tax either now or in the near future. Alternative proposals to increase the exempt portions of estates from tax and/or decrease the highest marginal estate tax rate may have greater appeal. We will keep you posted as this issue progresses.