New Estate Tax Legislation???

Investment News ran an article on a US House of Representatives bill which now has 221 co-sponsors to end inheritance taxes. Additionally the legislation also makes permanent the 35% gift tax rate with a $5 million lifetime exclusion. The Republican controlled House expects the bill to come to a vote this fall given the number of co-sponsors.

Where the bill would run into difficulties is in the Democratic controlled Senate, where is it not expected to come to a vote this year, and would then need to be re-introduced in 2015. The article alludes to political concerns rather than true concerns over updating and extending current estate tax laws.

Currently there are no sunset provisions in the existing estate tax laws, although they can be changed by Congress. Even with the large number of house members co-sponsoring the new bill, it will probably not pass both houses and become law. Currently the 2014 estate tax exemption is $5,340,000 (up from $5,250,000 for gifts made and estates of decedents dying in 2013), with a 40% tax on amounts above the exemption.

The Investment News reports on the legislation

Backers of a bill that would eliminate the estate tax are pushing for a vote in September now that they have achieved enough supporters to exceed a House majority.

The measure, which ends inheritance and generation-skipping transfer taxes, has 221 co-sponsors, or three more than needed for a House majority. The legislation also would make permanent a 35% gift-tax rate with a $5 million lifetime exclusion.

Palmer Schoening, executive director of the Family Business Coalition, said a House floor vote had been scheduled earlier this summer but was postponed after House Majority Leader Eric Cantor, R-Va., lost a primary election in June.

The groups pushing the bill are now urging incoming House Majority Leader Kevin McCarthy, R-Calif., to put the measure on the House's fall agenda.

“We feel really good for a September vote,” Mr. Schoening said.

A spokesman for Mr. McCarthy did not respond to a request for comment.

Momentum for the estate-tax bill comes in part from House members who are running for the Senate in Arkansas, Oklahoma and Colorado, among other states, who want to showcase the vote.

“There are a number of members who are motivated to get this vote for political reasons,” Mr. Schoening said. “It's the most popular bill in the Republican conference right now.”

Its lasting impact is less certain. Even if the Republican-majority House approves the bill, it is not likely to be addressed by the Democratic-led Senate before the end of the congressional term in December. Any bills that fail to get full congressional approval have to be re-introduced in 2015.

But moving the bill through the House now will position estate-tax reform for later debate on broader overhaul.

“It shows that when tax reform gets going in earnest, this is an important issue to a lot of members,” said Marc Gerson, a partner at Miller & Chevalier and a former Republican tax counsel on the House Ways and Means Committee.

It may take another election, one that changes the party in the White House, to end the estate tax. If Republicans take control of the Senate — where an estate-tax bill has 37 co-sponsors — this fall, the party still faces a veto from President Barack Obama over the next two years.

In his fiscal 2015 budget, Mr. Obama proposed a top estate and gift tax rate of 45% with a $3.5 million individual exclusion for estates and a $1 million exclusion for gifts. Currently, estates are taxed at a 40% rate with a $5.3 million individual exclusion that is indexed for inflation.

Many Democrats oppose reducing or eliminating the estate tax because they say it mainly benefits the rich.

“In an environment where there's a concern about income and wealthy inequality, I don't see a strong likelihood of passing an estate-tax bill until 2017 at the earliest, if at all,” said Suzanne Shier, chief tax strategist and wealth planning practice executive at The Northern Trust Co.

Source: Investment News