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Monday, February 5, 2001 Deloitte & Touche OnLine Estate Tax Repeal: Back From the Dead? Despite an unsuccessful attempt to enact legislation last year, Congress remains committed to reforming the estate tax. And now, in the wake President George W. Bush’s promise to support an estate tax repeal, proposals are piling up on the Hill. “This is the official start of the funeral procession of the death tax,” declared House Ways and Means Committee member Jennifer Dunn, R-Wash., as she introduced her own estate tax repeal bill on January 31. So far, three new bills -- one in the House and two in the Senate -- have already been introduced in the 107th Congress, and at least one more is on the way. A Senate aide has told Deloitte & Touche that Senate Finance Committee members Jon Kyl, R-Ariz., and John Breaux, D-La., are expected to introduce estate tax repeal legislation some time during the week of February 5. Congress passed an estate tax repeal bill last year -- the Death Tax Elimination Act of 2000 (H.R. 8) -- but that measure, which lacked the support of then-President Clinton, ultimately was vetoed. Kyl-Breaux -- The Kyl-Breaux bill would be similar to one proposed by Kyl in the 106th Congress, under which the estate tax would be immediately eliminated. That effort contrasts to other proposals that have called for a phased-in repeal over a period of years. Kyl’s latest bill -- unlike his earlier proposal -- would allow up to $2.8 million of transfers to qualify for a step up in basis. The earlier version generally called for carryover basis. The “balanced, bipartisan” bill has “good” support among members of the Finance Committee, including Blanche Lincoln, D-Ark., the aide said. Gramm-Miller -- Last month, Senate Finance Committee member Phil Gramm, R-Texas, and Sen. Zell Miller, D-Ga., introduced as part of a package of individual income tax cuts, a plan to repeal the estate tax for transfers made after 2008. That proposed repeal would come more quickly than repeals proposed in the Death Tax Elimination Act of 2000 or in the House measure recently introduced by Jennifer Dunn (see discussion below). The Gramm-Miller plan would initially drop the estate tax rates in each bracket by 5 percent a year for the first five years, then by 10 percent for two more years. The plan does not contain a provision for a step up of basis for transfers. Estimated cost of the plan is $236 billion over 10 years. Campbell Proposal -- Another Senate proposal, S. 31, introduced on January 22 by Sen. Ben Nighthorse Campbell, R-Colo., would phase out the estate and gift taxes over 10 years. Rates in each bracket would drop 5 percent each year until completely eliminated in 2011. Dunn-Tanner -- In the House, meanwhile, Dunn and fellow Ways and Means Committee member John S. Tanner, D-Tenn., have introduced the Death Tax Elimination Act of 2001, which would phase in a repeal of the estate, gift, and generation-skipping taxes, beginning in 2001. The proposal has 151 Republican and 24 Democrat co-sponsors. The newest bill, while having many similarities to last year’s failed congressional repeal, H.R. 8, differs in that estate tax rates would fall more quickly. Under the 2001 proposal, the current estate tax brackets would be reduced 5 percent each year until the tax is completely eliminated in the year 2010. The proposal would also increase the unified credit amount from $675,000 to $1.3 million for decedents dying after December 31, 2000. In comparison, H.R. 8 replaced the unified credit with an exemption that would increase from $675,000 in 2001 to $1 million in 2006. The Dunn-Tanner proposal also would eliminate the current family-owned business exemption, which the co-sponsors described in a release as “overly complicated” and “of little use.” By increasing the unified credit as proposed, the legislation “strips away the complicated definitions” of the family-owned business exemption to provide the relief as originally intended by that exemption, the release states. Final Research Credit Regs Are No Longer Final The Treasury Department and the Internal Revenue Service took the unusual step of changing final regulations into proposed regulations on January 31 when they announced in an advance copy of Notice 2001-19 that they will review the final research credit regulations (T.D. 8930). The regulations were issued January 3 -- before President Bush took office -- and contained provisions, such as the discovery test for qualified research and the requirement that a paper record be maintained from the beginning of research, that were troubling to some members of the business community. In Notice 2001-19, the new administration announced that it is seeking comments on the regulations and would postpone the effective date of the regulations until after the review has been completed. The postponement does not apply, however, to provisions of the regulations relating to internal-use computer software. Those provisions, including any revisions, are applicable for tax years beginning after December 31, 1985. |
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Grassley Proposes Telecommunications Excise Tax Repeal Senate Finance Committee Chairman Charles Grassley, R-Iowa, introduced a bill (S.234) February 1 that would repeal the 3 percent federal telecommunications excise tax. The repeal would be effective for telephone bills rendered 30 days or later after the date of enactment of the underlying legislation. It would reduce federal revenues annually by $5 billion, according to a news release from Grassley’s office. The bipartisan bill currently has 19 co-sponsors, including Senate Finance Committee members John Breaux, D-La., Frank Murkowski, R-Alaska, James Jeffords, R-Vt., Orrin Hatch, R-Utah, and Jon Kyl, R-Ariz. House Ways and Means Committee members Robert Portman, R-Ohio, and Robert Matsui, D-Calif., introduced their version of the telephone excise tax repeal bill (H.R. 236) on January 6. The
repeal had been overwhelmingly approved by the House and Senate during the
106th Congress, as part of the $33 billion Legislative
Branch/Treasury-Postal appropriations bill. But the measure died when with
then-President Clinton vetoed the underlying appropriations package. Taxwriting Committee Rosters Complete With the appointment of Earl Pomeroy, D-N.D., to the Democratic side of the House Ways and Means Committee, the committee’s roster has been filled, topping out at 17 Democrats and 24 Republicans. Pomeroy, who served as co-chair of the House Democrats’ Social Security Task Force, “is nationally known as an expert and advocate on retirement savings, particularly pension reform,” according to Ways and Means ranking Democrat Charles Rangel of New York. Pomeroy will serve on the Oversight and Social Security subcommittees. The committee’s two new Republican members are Kevin Brady, a three-term representative from Texas, and Paul Ryan, a two-term representative from Wisconsin. Both will serve on the Social Security and Select Revenue Measures subcommittees. Senate Finance Committee Members -- In the Senate, Republican leaders chose Sens. Jon Kyl of Arizona and Olympia Snowe of Maine to fill the two GOP vacancies on the Finance Committee. Senate Democrats announced five new members: Minority Leader Thomas Daschle of South Dakota, and Sens. Jeff Bingaman of New Mexico, John Kerry of Massachusetts, Robert Torricelli of New Jersey, and Blanche Lincoln of Arkansas. The committee is now evenly divided at 10 Democrats and 10 Republicans. An appendix listing the complete rosters of both committees -- along with subcommittee assignments, where available -- appears below. |
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Appendix Taxwriting
Committee Assignments
Taxwriting
Subcommittee Assignments Note: House Ways and Means subcommittee
assignments are listed below. The Senate Finance Committee has yet
to release subcommittee assignments.
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