Washington--The chairman of the Senate Finance Committee laid out plans for next year to deal with issues of estate taxes and health care reform for the upcoming legislative session.
Sen. Max Baucus, D-Mont., said Congress will move next year to make the 2009 estate-tax level under current law permanent and indexed for inflation, while laying plans to reform the nation's health care system.
Sen. Baucus' comments were part of an ambitious agenda he laid out to reporters on Wednesday on Congress' plans for 2009 and 2010.
Reacting to Sen. Baucus' comments, John Prible, assistant vice president for federal affairs at the Independent Insurance Agents and Brokers of America, said the trade group has long supported permanent reform of the estate tax, "and we are excited and encouraged that Sen. Baucus has plans to pursue such reform."
He added, "We hope that this issue can be approached in a bipartisan manner for the benefit of insurance agents and consumers across the country."
Under current law, the 2009 level is a $3.5 million per-person exemption and a 45 percent maximum tax rate. Currently, in 2010 the estate tax would expire and be reinstated in 2011 with a $1 million exemption and a 55 percent tax rate--the level that existed when the tax was enacted in 2001.
Life insurance lobbyists asked about Sen. Baucus' comments on the estate tax said they would lobby for unification of the estate and gift tax exemptions when the issue comes before Congress.
David Stertzer, chief executive officer of the Association of Advanced Life Underwriters, explained that under current law, while the estate tax exemption increases to $3.5 million in 2009, the gift tax exemption is locked at $1 million.
"Reunification would remove this differential, which discourages earlier transfers of assets--including small businesses--and would greatly improve succession planning and increase viability of businesses as they pass from one generation to the next," Mr. Stertzer said.
Sen. Baucus said the first legislative action would be on the huge stimulus package President-elect Barack Obama plans for when he takes office Jan. 20, and work on the estate tax would soon follow.
He indicated that funds to facilitate electronic transmission of health care records would be part of the stimulus package.
Work on legislation tackling broader tax issues and paying for the huge sums Congress has appropriated to cut short the current economic downturn would be delayed until 2010, he said.
That means raising taxes on the wealthy will not take place in 2009, as President-elect Obama had promised during his presidential campaign, but will be consistent with statements the president has made since the election.
The Sen. Baucus also discussed plans for health insurance reform. He said the legislative process will avoid the legislative debacle that befell the Clinton administration when it introduced its reform package.
He said he is finishing work on legislation reforming the health care system that he hopes to be able to introduce by the end of the year. The legislation would be bipartisan and he cited the support of other key players in the Senate on the issue.
Introduction of the legislation is being delayed until the Congressional Budget Office completes its "scoring" of the bill, he explained, which is its impact on the federal budget over 5 to 10 years. He has asked the Congressional Budget Office to break down the cost of each component of his reform package.
He said taxes would be part of health care reform, noting that money is needed to "finance health care."
Ira Loss, a health care analyst at Washington Analysis, said Sen. Baucus' comments are consistent with his view that "significant action on comprehensive health care reform is not likely until 2010 at the earliest."
Mr. Loss explained that you have to "deal with the acute issues, i.e. providing funds dealing with the huge downturn in the economy, before you deal with chronic issues, like health care reform."
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