Sens. Lincoln and Kyl introduce estate tax fix

via thehill.com

Sens. Blanche Lincoln (D-Ark.) and Jon Kyl (R-Ariz.) introduced legislation late Tuesday creating a permanent fix for the estate tax.

Their proposal would require Democratic leaders to amend the small-business jobs bill with a provision that sets the estate tax at 35 percent with a $5 million exemption. These amounts will be phased in over a 10-year period and also be indexed for inflation. In addition, inherited assets would be taxed at their worth upon transfer, not when the deceased purchased them.

The senators have tried for two years to permanently fix the estate tax. But with the tax being repealed in January, efforts to do something have become more urgent, as lawmakers on both sides of the aisle do not want the estate tax to return to pre-2001 levels, which is scheduled to occur in 2011 when estates worth more than $1 million will be taxed at 55 percent.

Still, it is not clear if Senate Majority Leader Harry Reid (D-Nev.) will allow a vote on the amendment. He has limited the number of amendments that can be added to the bill, though Republicans will be allowed to offer some.

Reid has already signaled that the small-business bill will be one of three proposals that will pass his chamber before the August recess. It will likely be the last legislative train to leave Capitol Hill, as lawmakers will be focused on November's elections in the fall.

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Ranchers demand a fix for the estate tax

via thehill.com

With less than 30 legislative days left on the congressional calendar, the National Cattlemen's Beef Association on Tuesday warned lawmakers that time was running out to fix the estate tax. Steve Foglesong, the association's president, warns inaction will force some ranchers and farmers to close their operations.

"They're in essence handing down a death sentence to family-owned farming and ranching operations," he said in prepared remarks. "Taxing family farmers and ranchers out of business will have serious impacts on all Americans, not just in our rural communities."

Because farm and ranch assets consist mainly of land, buildings and specialized equipment, these estates may look wealthy on paper. But they include few assets that can be liquidated to pay the tax without closing the business. These estates are five to 20 times more likely to incur estate taxes than other estates.

"This is not a tax on the 'wealthy elite,'" Foglesong said. "The wealthy can afford accountants and estate planners to help them evade the tax... Farmers and ranchers are often forced to sell land, equipment, or even the entire ranch just to pay off tax liabilities."

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Tax writers have full agenda in run-up to summer break

via thehill.com

Senate Finance Chairman Max Baucus (D-Mont.) wants to move a small business tax package before the August recess. The legislation exempts capital gains taxes on certain C corporation stock, extends “bonus depreciation” allowing companies to expense 50 percent of the cost of equipment, and allows self-employed workers to deduct health insurance costs from their self-employment tax.

The bill also enables small businesses to get a refund on past tax payments and count general business credits against the alternative minimum tax. The proposal includes measures that passed the House as well, such as penalty relief for businesses that invested in certain tax shelters.

Once debate begins again on the bill, Senate Minority Whip Jon Kyl (R-Ariz.) has indicated that he would like to amend the measure with a fix for the estate tax.

The tax on estates is repealed, but barring congressional action it returns next year to pre-2001 levels by socking estates worth more than $1 million with a tax that tops out at 55 percent. Republicans and more than a few Democrats oppose this level and prefer rates set in 2009, when estates worth over $3.5 million were taxed at a top rate of 45 percent.

In December, the House passed legislation (H.R. 4154) making permanent 2009 estate tax rules, which costs a whopping $233.6 billion over 10 years. The Senate has yet to take up the measure.

Tax lobbyists expect a lot of tax activity in the coming weeks, but aren’t sure how much of it will produce legislation aimed for the White House. They expect the lame duck session will be when most bills pass Congress, but aren’t sure if the Bush middle-class tax cuts will be a part of the group.

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Sen. Chuck Grassley: Tax limbo affects family businesses

via iowapolitics.com

Sen. Chuck Grassley (R-Iowa) continues to urge estate tax reform. Though some of his recent floor speech seems to be political posturing, it is hard to overlook Grassley's underlying theme - "We’re almost half a year away from a tax policy that a super majority of Senators say they don’t support. Yet, we’re stuck. This time-sensitive issue has taken a back seat to everything else."

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