Pressure Mounts to Act on the Estate Tax

“The Hill” reports that:
Sen. Chuck Grassley (R-Iowa) on Wednesday urged Senate Majority Leader Harry Reid (D-Nev.) to act on making changes to estate tax law before it reverts back to pre-2001 levels in 2011.

The senator warned that no action would mean thousands of small business owners and farmers would be subjected to the tax.

“I hope that the Democratic leadership will soon reveal their hand so that those thousands of small businesses and farmers aren’t hung out to dry,” he told reporters.

The tax currently is repealed, but – barring congressional action – it returns next year to pre-2001 levels by socking estates worth more than $1 million with a tax that tops out at 55 percent.

Sens. Jon Kyl (R-Ariz.) and Blanche Lincoln (D-Ark.) have hatched a bipartisan plan that would create a permanent 35 percent tax on estates worth more than $5 million. But without Reid backing the proposal, Grassley said the Senate Finance Committee is unlikely to bring the bill forward.

“The Finance Committee would like to consider the legislation, but we aren’t assured by the majority leader that the bill passed out of committee would be taken up on the floor,” he said.

Grassley is the ranking member on the Finance Committee and has conferred with Kyl and Senate Finance Chairman Max Baucus (D-Mont.) on the estate tax. Both men say Reid is playing his cards close to the vest when it comes to the levy.

“Reid will not really give us a clear direction,” Grassley said, adding, “I think that there’s going to be a tremendous upheaval at the grassroots of America – and more rural America than big city America – if it looks like we’re going to revert to the million-dollar level.”

Lawmakers were supposed to be close to a deal on the tax a few weeks ago, but that agreement apparently fell apart. During those negotiations, Kyl said there was some disagreement on how to pay for the bill. However, today, Grassley said offsets were no longer an issue, but did not say what offsets were being used to pay for the bill.

“We can find the offsets, that’s no problem,” he said. “It’s not easy and one of the offsets was in another bill, but I don’t think offsets is the problem.”

Grassley could not say when the estate tax would be addressed.

“It’s difficult, particularly when Republicans with only 41 members, [don’t] have much push to make the majority do such-and-such,” he said.

Posted in Status of Tax Legislation, WillPlan Blog.

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