Senate Centrists Ponder Gradual Estate Tax Reduction

From Nasdaq.com:

A bipartisan group of senators who favor lowering estate taxes are studying a proposal to gradually reduce the tax until it reaches 35% in 2019.

The senators, led by Sens. Jon Kyl (R., Ariz.), and Blanche Lincoln (D., Ark.) , have long sought to cut the tax from its current level of 45%, and exempt more small businesses and estates from the tax.

But congressional pay-as-you-go budgeting rules and a crowded Senate schedule have led them to consider staking their hopes on a gradual reduction of the tax, Senate aides said.

A House bill introduced last month by Reps. Shelley Berkley (D., Nev.) and Kevin Brady (R., Texas), last month provides the template for what a phase-down of the tax might look like. The current rate of 45% would be reduced by one percentage point per year, and the exemption of $3.5 million would increase by $ 150,000 per year. In 2019, the rate would be fixed at 35% and the exemption amount at $5 million.

House Ways and Means Chairman Charles Rangel (D., N.Y.) favors extending the 2009 estate tax policy permanently. The House is likely to pass within the next few weeks legislation that either permanently extends 2009 law, or does so for one year only.

Business groups including the National Federation of Independent Business and the National Association of Manufacturers are slated to meet Tuesday to discuss end-of-year strategy on estate tax legislation.

Kyl and Lincoln won 51 Senate votes in April, including 10 Democrats, for an amendment to the Senate budget blueprint that embraced a 35% estate tax rate and a $5 million exemption level. But ultimately the budget stipulated that any estate tax policy that is more generous than the 45% and $3.5 million exemption in current policy must be offset by other tax increases or spending cuts.