- House Bill 6499 was introduced on July 15, 2008, in the House by Rep. Jim McDermott (D-WA).
- Senate Bill 3284 was introduced on July 17, 2008, in the Senate by Senators Tom Carper (D-DE), Patrick Leahy (D-VT) and George Voinovich (R-OH).
House Bill 6499 is described as "The Sensible Estate Tax Act of 2008" that would "reform the estate and gift tax." However, the sponsor's own Congressional website does not carry a press release about it, and does not even list federal estate tax as a key political issue. There was almost no mention in the media as to the introduction of this bill in the House.
Senate Bill 3284, on the other hand, was explained and promoted by its sponsors in a Press Release issued July 17, 2008, entitled "Sens. Carper & Voinovich Introduce Bill to Fix Estate Tax" describing the bipartisan legislation as "More Fair to Taxpayers and More Fiscally Responsible."
On The Estate Planner's Listserv, operated by the American Bar Association, reactions to these newest bills were cautious, and, in some cases, dismissive, because of the "rough draft" format of the bills, the highly political nature of the issues, the unknown fiscal impact of such tax reform, and the uncertain constituency of a new Congress to convene in January, 2009.
The legislation introduced today would freeze the estate tax at its projected 2009 levels so any estate valued at more than $3.5 million per individual or $7 million per couple will be taxed at a 45 percent rate. That level will remain constant, while being adjusted upward with inflation.
In recent years, several legislators have introduced bills that would permanently repeal the estate tax. However, these proposals have been rejected by many senators, including Sens. Carper and Voinovich, who have said a complete repeal of the federal estate tax is too expensive given our severe budget deficit. Instead, Sens. Carper and Voinovich have urged leaders to find a middle-ground on the issue.
“I believe our bipartisan approach to fixing the estate tax problem is a fair way of handling the issue and would cost roughly three-fifths as much as legislation making the repeal permanent,” Sen. Carper said. “Rather than giving up on finding a solution to the estate tax dilemma, I hope other senators will see our proposal as an acceptable middle ground.”
Under the Carper-Voinovich legislation, only two estates out of every 1,000 would be subject to the estate tax. That amounts to just 11,000 estates by 2012, compared to a much larger 50,000 estates that were being taxed back in 2001 when the tax started being phased out. * * *
These bills offer more of a framework with points for discussion than a definitive plan with details; and thereby add to the ongoing discussion. For background about that debate, see EE&F Law Blog postings:
- Fundamentals of Taxation, before Reform (04/18/08)
- FET Reform: Senate Hearings, Round 3 (04/07/08)
- US Senate Fin Cte to Hear FET Alternatives (03/11/08)
- CRS Summarizes Seven FET Proposals (03/03/08)
- Joint Tax Cte's Report & Hearing on Federal Estate Tax (11/14/07)
- Fed Est Tax Reform Bill Introduced (08/16/07)
- Fuzzy Future of the Federal Estate Tax (05/24/07)
- FET Reform/Repeal: Update (09/26/06)