Estate Tax Repeal Tripped Up In Senate

Estate Tax Repeal Tripped Up In Senate

By Steven Brostoff

NU Online News Service, June 13, 11:05 a.m. EST, Washington?Yesterday's vote by the U.S. Senate against permanent repeal of the estate tax most likely ends consideration of the controversial issue for the rest of this year, industry representatives say.

The estate tax debate has major implications for many family-owned insurance agencies. Relatives of principals often face significant tax liabilities when inheriting the family business, and some have even been forced to sell their agencies to pay the estate tax.

"In reality, the Senate vote was the last shot this year for those who want estate tax repeal at all costs," said David Winston, vice president, government affairs for the National Association of Insurance and Financial Advisors in Falls Church, Va. It is clear, he added, that since June of last year the proponents of repeal lost significant traction.

Maria Berthoud, senior vice president of federal affairs for the Alexandria, Va.-based Independent Insurance Agents and Brokers of America, which supports repeal, said the outcome was not surprising, given that 60 votes were needed for repeal to prevail. But she said the 54 votes in favor of permanent repeal is encouraging, and the proponents of repeal are not giving up.

"We will be back at some point, sooner or later," Ms. Berthoud said.

The effort to permanently repeal the estate tax ended when proponents fell six votes short of the 60 needed in the Senate to approve a repeal measure. The Senate vote was 54-44.

Under current law, the estate tax will phase out on Jan. 1, 2010. However, due to a sunset clause in the phaseout legislation, the estate tax will return on Jan. 1, 2011.

It was unclear at press time whether Congress would now take up efforts to reform, rather than repeal, the estate tax. Much of the speculation in the media was that both Democrats and Republicans would debate the issue in the upcoming Congressional elections.

Mr. Winston said he believes senators considered the issue of repeal in light of the resumption of budget deficits, the need to enhance homeland security, the desire to provide Medicare beneficiaries with a prescription drug benefit, and other more pressing concerns.