Is Repeal Close to Being Repealed?

The Senate has passed the jobs bill, and health reform seems to be on the back burner for a while. Harry Reid says travel promotion is next on the agenda for the Senate, and after that could be some tax legislation. Perhaps within a few days.

Of course, on this blog, when we're thinking tax legislation, we're thinking estate tax legislation. Senator Jon Kyl, as quoted by The Hill, seems to like that idea, and there may be several others in the Senate who are willing to bring the estate tax into the tax debate. Kyl likes a 35 percent tax rate and an exclusion amount of $5 million, and that may be too high for the Democrats. But we would rather see the Senate at least discussing the issue instead of ignoring it.

Perhaps the Senate is beginning to feel some pressure from constituents. We're nearly two months into repeal, and there hasn't been even the briefest discussion of the estate tax on the floor of the Senate. The Treasury loses money every day that repeal remains in effect. But it's not too late yet.

Stuck In The Snow

The Senate is still stuck in the snow, literally, and as far as the federal estate tax is concerned, but there may be some progress if you look hard enough.

An $80 billion jobs bill is being crafted by Sen. Harry Reid, in consultation with his Republican counterparts, and the estate tax may be one of the subjects of the bill. The expectation on the Democratic side of the aisle is that enough Republicans will support the estate tax part of the bill to pass the entire jobs bill. Exact details aren't known yet, but we'll accept anything at this point because certainty is way ahead of uncertainty when it comes to tax law.

And in another development, at another Senator is waking up to the fact that the future of the estate tax is problematical. Sen. Maria Cantwell is trying to stir up some interest concerning the tax, according to her website:

“Senator Maria Cantwell and several Senate colleagues have requested information from the Congressional Joint Committee on Taxation about several ideas concerning the estate tax, which has expired. Senator Cantwell is seeking data to discuss with constituents and colleagues. Information requested from the committee includes the following concepts: establishing a lower-rate prepayment option; the elimination of loopholes and special carve outs from the estate tax; the elimination of special capital gains tax breaks for surviving spouses; and various levels of overall exemptions from the estate tax. Senator Cantwell looks forward to getting the data from the Joint Committee on Taxation and sharing the information with constituents.”

Meanwhile, the Senate has two days left to consider the jobs bill before taking off for another break. Maybe it will stop snowing by the time the Senate reconvenes on Feb. 22.

Eleven Months Left

It's difficult to blog about the Senate's progress on H.R. 4154 when there is no evidence of any action on the estate tax. The Senate came back late from the holidays on Jan. 19, and has spent the last two weeks apparently doing nothing about the estate tax. H.R. 4154 was passed by the House on Dec. 3, but has not been the subject of any hearings in the Senate, nor has it been placed on a calendar for a Senate debate.

There was talk late last year that Sen. Baucus wanted to introduce a bill similar to H.R. 4154, which continues the estate tax with a $3.5 million exclusion amount. Sen Baucus's bill would make the estate tax retroactive to Jan. 1, instead of allowing any period of repeal. A check of Sen. Baucus's website shows no mention of such a bill, and a search of his committee websites also produces no results. Must have been a nasty rumor.

In any event, the longer this goes, the less chance there is that retroactivity will work. The Supreme Court might have bought into a few weeks of retroactive tax legislation, but several months or an entire year probably would be rejected by the justices.

So here we are: One month down the drain, 11 months left until we're back to where we would have been if the current tax bill had not been approved in 2001. And that's a $1 million exclusion and a maximum tax rate of 55 percent. Sound too bad to be true? Wake up some Senators and ask them.