Estate Tax Legislation in the 108th Congress

Publication Date: May 2004

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Banking and finance

Type:

Abstract:

Under provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA, P.L. 107-16, enacted June 7, 2001), the estate tax and generation-skipping transfer tax are scheduled to be repealed in 2010 but reinstated in 2011. This is because all tax cut provisions of EGTRRA are scheduled to sunset on December 31, 2010. This report tracks actions in the 108th Congress to permanently repeal -- or retain but alter -- the estate tax.

On June 18, 2003, the House passed H.R. 8 (Dunn), which would make the repeal of the estate tax permanent from 2010 onward. Prior to that vote, under provisions of the rule (H.Res. 281), the House debated and then defeated the Pomeroy substitute amendment (H.Amdt. 171 to H.R. 8) to retain the estate tax but increase the exclusion amount to $3 million per decedent beginning in 2004.

Thus far in the 108th Congress, 26 measures addressing the estate tax have been introduced, 19 in the House and 7 in the Senate. The bills can be grouped into three categories. First, seven House bills would make the estate tax repeal permanent after 2010. Four bills would remove the sunset provision only for the estate tax provisions of EGTRRA: H.R. 8 (Dunn), H.R. 57 (Dunn), H.R. 139 (McGinnis), and H.R. 158 (Pitts). S.J.Res. 20 (Kyl) and S.J.Res. 21 (Kyl) would express the sense of Congress that the number of years during which the estate tax is repealed should be extended, pending the permanent repeal of the estate tax. The revenue cost for FY2013 from permanent repeal of the estate tax has been estimated in 2004 at $50 billion by the U.S. Treasury Department and $55 billion by the Joint Committee on Taxation. In addition, four bills would repeal the entire sunset provision, making all of EGTRRA's tax cuts permanent: H.R. 210 (Tiberi), H.R. 407 (Bonner), H.R. 1612 (Hulshof), and H.R. 3773 (Hulshof).

Second, four bills, one in the House and three introduced by Senator Kyl, would accelerate the repeal of the estate tax sooner than the 2010 date scheduled by EGTRRA and make the repeal permanent. H.R. 51 (Cox) would repeal the gift tax along with the estate tax effective in 2003. S. 13 (Kyl), S. 169 (Kyl), and S. 96 (Kyl) would accelerate the repeal of the estate tax to 2005.

Third, twelve bills, ten in the House and two in the Senate, would retain but alter the estate tax. Some would lower the tax rate. Eight House bills would increase the exclusion amount for all estates. This includes H.Amdt. 171 (Pomeroy) to H.R. 8, H.R. 396 (DeFazio), H.R. 2477 (Ford), H.R. 2480 (Leach), H.R. 2481 (Lowey), H.R. 2502 (Bereuter), H.R. 2532 (Kennedy, P.), H.R. 2610 (Peterson, C.), and H.R. 2682 (Lowey). S. 135 (Dayton) would both increase the exclusion amount for all estates and provide a complete estate tax exclusion for family-owned businesses. In addition to S. 135, companion bills H.R. 2513 (Thompson) and S. 34 (Lincoln) would immediately and permanently repeal the estate tax on family-owned businesses and farms. In contrast to S. 135, which uses a step-up in basis, H.R. 2513 and S. 34 would use carryover basis to calculate the capital gain if the beneficiary later sold the family-owned business interest. This report will be updated as events warrant.