Two basically identical bills will be introduced in the Senate and House to permanently eliminate death taxes sponsored by Senators Jon Kyl, R-Ariz., and Bill Nelson, D-Fla., and Representatives Kenny Hulshof, R-Mo., and Robert Cramer, D-Ala.
Under current law, after several years of gradually increased exemptions and lowered rates, the estate tax is scheduled to be repealed for estates of individuals who die in 2010. But without further congressional action, the tax will be reinstated in full in 2011. In 2005 the exemption is $1.5 million and the highest federal estate tax rate is 47%.
The American Farm Bureau Federation (AFBF) says increasing the estate tax exemption is not the answer because only repeal can erase the burden and uncertainties of estate tax planning. Farmers and ranchers are forced to pay for expensive estate planning and for large life insurance policies to try and keep the farm from being sold when a death occurs.
AFBF President Bob Stallman says, "Children have no choice in continuing the family business. They make decisions about leaving the farm prior to a death because they know the business cannot continue once the death taxes are imposed."
The potential for enough votes in the 109th Congress for a permanent repeal of the estate tax is the best in years, say several groups including the AFBF, National Cattlemen's Beef Association and National Grocers Association. "Repeal is not assured, but the composition of the Senate - which has been the major obstacle to permanent repeal - has changed to the extent that a 60-vote majority for passage is now significantly more likely," a statement from the National Grocers Association says.
Republican leadership is likely to garner support from 53 of its 55 members to vote for repeal. Additional votes are likely to be obtained from 7 Democrats who have advocated repeal and who voted for it 2002, the last time the Senate considered the matter. Additionally, there are several other Democrats who either have expressed support for the repeal or who might be reconsidering their previous anti-repeal votes in light of the Republican victories in November.