WASHINGTON–Independent insurance agents are urging the Senate to support the comprehensive estate-tax reform legislation approved overwhelmingly by the House on Thursday.

In a statement, officials for the Independent Insurance Agents & Brokers of America said it “applauded” the House for passing a comprehensive estate-tax reform bill, which it called a “common-ground” solution to the estate-tax burden imposed on small businesses.

“We will be working very hard to convince the Senate to move forward,” said Charles E. Symington Jr., IIABA senior vice president for government affairs and federal relations. “This legislation is very important to our members and small-business people across America.”

H.R. 5638, the “Permanent Estate Tax Relief Act,” was introduced Monday by Rep. Bill Thomas, R-Calif., chairman of the House Ways and Means Committee. It passed the House 269-156 on Thursday.

The legislation would exempt from tax estates worth up to $5 million. It also would make it easier to pass on the full exemption to a spouse, index the $5 million exemption to inflation, and tax assets beyond the exempted amount, up to $25 million, at the 15-percent capital-gains tax rate.

Under existing law, the current estate tax relief will expire Dec. 31, 2010. Without further legislation, some estate taxes would revert to rates ranging from 20-to-40 percent.

The bill would allow heirs to have a “stepped-up” basis to such assets as a small business. But at the same time, the new legislation does not deduct from federal taxes the amount heirs pay for state taxes.

Analysts say this is a big factor for heirs living in such states as Washington and New York, and is making even conservative senators who are highly supportive of repeal, or alternatively, reform of the tax, leery of the House bill.

The Senate could take up the bill as early as the end of June. Concerns by Democrats and some Republicans, however, are reducing the odds the legislation would be enacted this year.

Alternatives to the House bill, under consideration by the Senate Republican leadership, include attaching a compromise estate-tax reform bill to defined benefit pension reform legislation, which is now being considered by a joint House-Senate Reconciliation Committee. There could also be a compromise offering to Democrats that would include increasing the minimum wage to $7.25 an hour in three steps.

The IIABA's position is that it supports the elimination, or at least the significant reduction, of estate taxes to encourage investment and growth in small businesses.

“This is crucial to the 300,000 IIABA members across America, many of whom own their own agencies and whose families face significant tax burdens when these businesses are passed along to their heirs,” IIABA officials said. “The prospect of heavy estate taxes also diminishes the value of small businesses if they are sold,” IIABA officials pointed out.

Special Reports /

IIABA Urges Senate Support Of Estate-Tax Reform

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