House Poised to Make Hollow Estate Tax Relief Promise

Apr 03, 2001, 01:00 ET from Americans for Sensible Estate Tax Solutions

    WASHINGTON, April 3 /PRNewswire/ -- As the U.S. House of Representatives
 considers the next round of tax cuts in President Bush's overall tax cutting
 agenda, Americans for Sensible Estate Tax Solutions (ASsETS) today said the
 legislation to repeal estate taxes is all style and no substance.  The House
 is expected to consider, H.R. 8, the "Death Tax Elimination Act of 2001" as
 early as today.
     "The House wants to pass estate tax repeal in the worst way -- literally,"
 said Eric Hoffman, executive director of Americans for Sensible Estate Tax
 Solutions (ASsETS), a coalition that advocates reforming, rather than
 repealing the tax.  "The House Ways and Means Committee made all the right
 noise last week about providing relief, but the devil is in the details.  All
 this bill does is guarantee that heirs will continue to get hit with estate
 taxes for the next 10 years."
     The bill that the House will consider, H.R. 8, repeals estate, gift and
 generation-skipping taxes in 2011.  It pays for this by imposing a "carryover
 basis" regime when determining the value of assets, meaning that heirs will be
 liable for taxes on assets valued from the time of their purchase.  Imposing a
 carryover basis will lead to high record keeping costs for taxpayers and
 requiring taxpayers to keep records that could be used against them in the
 event of an audit.
     "Carryover basis is a wolf in sheep's clothing," Hoffman said.  "It
 creates administrative nightmares and empowers the IRS to intrude in family
 transactions.  Congress tried this in 1976 and quickly scrapped it.  It was a
 bad idea then, it's still a bad idea today."
     H.R. 8 also disproportionately benefits larger estates by repealing both
 the five percent surtax and rates in excess of 53 percent.  Lastly, the bill
 replaces the unified credit with a unified exemption.
     Last week Congress' Joint Committee on Taxation pegged the costs of
 outright repeal of the federal estate tax at $662.2 billion -- a figure that
 represents 1/3 of the entire tax-cutting package supported by President Bush.
     "Congress says it wants repeal but they can't afford it.  Immediate estate
 tax repeal is such a budget buster, they've cobbled together a political
 promise that will look good on C-Span but ring hollow in 2011," Hoffman said.
     To provide immediate estate tax relief for their constituents, members of
 Congress should immediately raise the estate tax exemption levels, lower the
 top tax rates for estates and adjust for inflation.  This type of reform
 legislation would immediately repeal the tax for 99 percent of Americans and 8
 out of 10 estates that annually are subject to the tax.
     "I think most folks would rather have a guaranteed higher exemption now
 and pay nothing, rather than have some "Congressional promise" to gradually
 reduce rates and still have to cough up based on current exemptions," said
 former U.S. Senator Alan K. Simpson (R-WY), who supports ASsETS efforts to
 reform the estate tax.
     Currently, estate taxes are imposed on estates above $675,000 for an
 individual and $1.3 million for a couple.  In 1998, according to the latest
 Internal Revenue Service data available, 47,483 estates were impacted by the
 estate tax.  Estimates based on IRS data show that only 780 were small
 businesses with significant business assets and 650 were family farms with
 significant farm assets.
 
     About ASsETS:
     ASsETS is a broad-based coalition of economists such as James Galbraith,
 professor at The University of Texas at Austin and Neil Harl, professor at
 Iowa State University; charitable organizations such as Minnesota Council of
 Nonprofits and Frank Minton, president of Planned Giving Services; tax
 experts, such as Jonathan Blattmachr, partner at Milbank, Tweed Hadley &
 McCloy; members of the insurance community, such as the Association for
 Advanced Life Underwriting and the National Association of Insurance and
 Financial Advisors; and agriculture organizations such as the National Farmers
 Union.  For more information, please call 1-866-REFORM2 or visit the website
 at http://www.assetscoalition.org .
 
 

SOURCE Americans for Sensible Estate Tax Solutions
    WASHINGTON, April 3 /PRNewswire/ -- As the U.S. House of Representatives
 considers the next round of tax cuts in President Bush's overall tax cutting
 agenda, Americans for Sensible Estate Tax Solutions (ASsETS) today said the
 legislation to repeal estate taxes is all style and no substance.  The House
 is expected to consider, H.R. 8, the "Death Tax Elimination Act of 2001" as
 early as today.
     "The House wants to pass estate tax repeal in the worst way -- literally,"
 said Eric Hoffman, executive director of Americans for Sensible Estate Tax
 Solutions (ASsETS), a coalition that advocates reforming, rather than
 repealing the tax.  "The House Ways and Means Committee made all the right
 noise last week about providing relief, but the devil is in the details.  All
 this bill does is guarantee that heirs will continue to get hit with estate
 taxes for the next 10 years."
     The bill that the House will consider, H.R. 8, repeals estate, gift and
 generation-skipping taxes in 2011.  It pays for this by imposing a "carryover
 basis" regime when determining the value of assets, meaning that heirs will be
 liable for taxes on assets valued from the time of their purchase.  Imposing a
 carryover basis will lead to high record keeping costs for taxpayers and
 requiring taxpayers to keep records that could be used against them in the
 event of an audit.
     "Carryover basis is a wolf in sheep's clothing," Hoffman said.  "It
 creates administrative nightmares and empowers the IRS to intrude in family
 transactions.  Congress tried this in 1976 and quickly scrapped it.  It was a
 bad idea then, it's still a bad idea today."
     H.R. 8 also disproportionately benefits larger estates by repealing both
 the five percent surtax and rates in excess of 53 percent.  Lastly, the bill
 replaces the unified credit with a unified exemption.
     Last week Congress' Joint Committee on Taxation pegged the costs of
 outright repeal of the federal estate tax at $662.2 billion -- a figure that
 represents 1/3 of the entire tax-cutting package supported by President Bush.
     "Congress says it wants repeal but they can't afford it.  Immediate estate
 tax repeal is such a budget buster, they've cobbled together a political
 promise that will look good on C-Span but ring hollow in 2011," Hoffman said.
     To provide immediate estate tax relief for their constituents, members of
 Congress should immediately raise the estate tax exemption levels, lower the
 top tax rates for estates and adjust for inflation.  This type of reform
 legislation would immediately repeal the tax for 99 percent of Americans and 8
 out of 10 estates that annually are subject to the tax.
     "I think most folks would rather have a guaranteed higher exemption now
 and pay nothing, rather than have some "Congressional promise" to gradually
 reduce rates and still have to cough up based on current exemptions," said
 former U.S. Senator Alan K. Simpson (R-WY), who supports ASsETS efforts to
 reform the estate tax.
     Currently, estate taxes are imposed on estates above $675,000 for an
 individual and $1.3 million for a couple.  In 1998, according to the latest
 Internal Revenue Service data available, 47,483 estates were impacted by the
 estate tax.  Estimates based on IRS data show that only 780 were small
 businesses with significant business assets and 650 were family farms with
 significant farm assets.
 
     About ASsETS:
     ASsETS is a broad-based coalition of economists such as James Galbraith,
 professor at The University of Texas at Austin and Neil Harl, professor at
 Iowa State University; charitable organizations such as Minnesota Council of
 Nonprofits and Frank Minton, president of Planned Giving Services; tax
 experts, such as Jonathan Blattmachr, partner at Milbank, Tweed Hadley &
 McCloy; members of the insurance community, such as the Association for
 Advanced Life Underwriting and the National Association of Insurance and
 Financial Advisors; and agriculture organizations such as the National Farmers
 Union.  For more information, please call 1-866-REFORM2 or visit the website
 at http://www.assetscoalition.org .
 
 SOURCE  Americans for Sensible Estate Tax Solutions