Hoyer Urges Permanent Estate Tax Bill Putting One-Year Extension in Flux
By Heather M. Rothman and Jonathan Nicholson
Publication date: 11/19/2009
House plans for advancing estate tax legislation remained in flux late Nov. 18 after the chamber's leadership balked at a plan to simply move forward on a one-year extension of the current tax rate and exemption level rather than a permanent extension.
At a morning meeting of House Ways and Means Committee Democrats, Rep. Richard Neal (D-Mass.) said he pushed for and received assurances that the panel would move a one-year extension while tying a permanent estate tax plan to underlying tax reform in 2010.
But House Majority Leader Steny Hoyer (D-Md.), who has long supported a permanent fix; anti-deficit Blue Dog Democrats; and Republicans immediately expressed opposition to that plan for a variety of reasons, creating a roadblock for enactment.
Hoyer visited the Ways and Means Democrats for an evening meeting and spent one hour making what lawmakers called a “convincing argument” for a permanent bill. Hoyer said he was “hopeful” that he had swayed the panel's 26 Democrats. Asked if he would schedule for floor consideration a one-year extension if that is what the committee produces, Hoyer said he was not going to anticipate what the panel would do.
Committee Chairman Charles Rangel (D-N.Y.) said Hoyer's arguments “made a lot of sense.” Committee Democrats will meet again Nov. 19. “We'll keep working on it until we get it right,” he said.
Process, Timing Also Still Unclear
Staffers said if the one-year plan advanced, they would not write into the legislation language tying a permanent fix to tax reform, saying the more likely scenario is that the connection would be made in floor speeches and possibly through “sense-of-Congress” language.
The current estate tax rate is 45 percent with an exemption level of $3.5 million for individuals and $7 million for couples. Unless something is done, in 2010 the rate and exemption level will fall to zero and then jump up to 55 percent and $1 million, respectively, in 2011.
Rep. John Larson (D-Conn.), a member of the tax-writing committee and the chairman of the House Democratic Caucus, said no decisions were made on whether any estate tax bill would be a stand-alone measure or somehow tied to other tax bills expected to move this year related to job creation and expiring provisions.
There is no timing yet for consideration of this measure, lawmakers said, except that it would happen before Congress leaves for the year.
Opposition Could be Strong Among Democrats
Just because support for moving a one-year plan was strong among committee Democrats meeting inside Rangel's Capitol office in the morning does not mean it will be strong in the broader caucus, committee member Earl Pomeroy (D-N.D.) said.
The fiscally conservative Blue Dog Democrats met Nov. 17, and within that group of 52 there was a “strong consensus for a permanent fix,” Pomeroy said. “It's not about that room,” he said motioning to Rangel's office, “it's about the floor.”
Pomeroy said that a one-year extension of 2009 levels simply furthers the uncertainty already felt by taxpayers because of the structure of the current statute, a concern echoed by Republican tax writers.
Republicans Oppose One-Year Plan Too
Ways and Means Committee ranking member Dave Camp (R-Mich.), who has not seen any legislative language, said a one-year plan “really just doesn't bring the certainty that most small business and family farms want to have.” He said a short-term plan would just kick the can down the road and “I think the Senate will kick it back.”
Camp is skeptical the Senate will get behind the one-year House plan because that chamber has a bipartisan plan—supported by the National Association of Manufacturers, U.S. Chamber of Commerce, and the National Federation of Independent Business—that would make permanent an estate tax exemption amount of $5 million for individuals ($10 million for couples), and a maximum tax rate of 35 percent.
Similarly, there is a bipartisan plan (H.R. 3905) in the House that would extend the current estate tax through 2010 and then over the next 10 years reduce the rate from 45 percent to 35 percent while raising the exemption from $3.5 million to $5 million.
Also pending in the Senate is a plan (S. 722) by Finance Committee Chairman Max Baucus (D-Mont.) that would permanently freeze the 2009 rate and index to inflation the 2009 exemption levels.
The complete text of this article can be found in the BNA Daily Tax Report, November 19, 2009. For comprehensive coverage of taxation, pension, budget, and accounting issues, sign up for a free trial or subscribe to the BNA Daily Tax Report today. Learn more at http://www.bna.com/products/corplaw/dtr.htm.
© 2009, The Bureau of National Affairs, Inc.
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