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Estate Tax: Legislative Activity in 2002

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Publication Date: July 2002

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Banking and finance

Type:

Abstract:

Under the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA, P.L. 107-16), the estate tax is scheduled to be repealed in 2010 but reinstated in 2011. All tax provisions of EGTRRA are scheduled to sunset on December 31, 2010. On April 18, 2002, the House passed H.R. 586, part of which would remove the sunset provision and thereby make permanent the repeal of the estate tax and all other provisions of the tax cut law enacted in June 2001. On June 6, 2002, the House passed H.R. 2143 which would remove the sunset provision solely from the estate tax provisions of EGTRRA. The House defeated a substitute amendment offered by Representative Pomeroy that would have retained the estate tax but increased the exclusion to $3 million per decedent in 2003.

The Senate leadership agreed to take up the estate tax alone, before June 28, 2002, through H.R. 8, under a unanimous consent agreement. On June 12, the Senate failed to waive the budget point of order on the three amendments offered. The Gramm-Kyl amendment, identical to H.R. 2143, would have removed the sunset provision on the estate tax provisions of EGTRRA, making estate tax repeal permanent. A Democratic substitute amendment offered by Senator Conrad would have kept the maximum estate tax rate at its 2002 level of 50% and increased the exclusion per decedent to $3 million in 2003 and $3.5 million in 2009. An amendment to the Democratic substitute offered for Senator Dorgan would have provided a full tax deduction for qualified family-owned business interests starting in 2003, increased the exclusion to $4 million per decedent in 2009, and permitted the maximum tax rate to continue to fall to 45% for 2007 and after. The underlying estate tax repeal bill, H.R. 8, was not voted on and was returned to the Senate calendar. This report will be updated as legislative events warrant.