Breaking News – $5m Exemption and 35% Rate Sought As Amendment to Small Business Jobs Bill
It may be a lazy summer day in the Eastern United States, but not on the transfer tax news front.
The Hill reports here and Pat Lynch’s blog reports here that Senators Kyl and Lincoln introduced legislation late on Tuesday, July 13 that would require the Senate Finance Committee to amend to amend H.R. 5297 (the Small Business Lending Fund Act of 2010) to permanently set the estate tax rate at 35%, with a $5m exemption amount phased in over 10 years and indexed for inflation.
The bill would also provide a stepped up basis for inherited assets.
It’s unclear whether the Lincoln-Kyl amendment is more than political theatre. The Hill reports that “it is not clear if Senate Majority Leader Harry Reid…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.”
Lincoln and Kyl introduced a proposal similar to yesterday’s proposal in October, 2009 and April, 2010, which wasn’t viewed favorably by Harry Reid, as reported here. Liberal commentators weren’t happy with the proposal either (see here).
In late June, Senators Whitehouse, Sanders, and Harkin introduced the “Responsible Estate Tax Act”, well summarized by Paul Caron here. The RETA features a $3.5m exemption and a graduated rate between 45% on estates between $3.5m and $10m, 50% between $10m and $50m, and 55% above $50m, with a 10% surtax on estates above $1b.
The Hill advises:
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.
Readers, between the RETA, the Lincoln-Kyl plan, and the tick-tock until EGTRRA runs its full course to a $1m exemption, the battle is joined. For clients and the T&E Community, the stakes are large. KYEstates will continue to monitor developments and keep you informed. For our prior coverage, see here.
(Thanks to Mike Bonasera at The Ohio Trust & Estate Blog for his breaking coverage of the Lincoln-Kyl amendment. Hani Sarji’s Future of the Federal Estate Tax Blog also provides coverage here.)
UPDATE – July 15. KYEstates traffic is at all-time record levels – the Kyl-Lincoln Amendment is clearly significant for the T&E community. In particular there are a lot of readers arriving here from Connecticut. Please leave a comment or send an email to carter{at}kyestates{dot}com and let us know how you found the site, along with any other comments. Thank you for visiting KYEstates – we’re so glad you’re here.
2nd Update, July 15. Mystery solved! Thanks to reader Bryan Galat of The Private Client Law Group in Atlanta, who tipped us about the listserv post by Suzy Walsh of Cummings & Lockwood in West Hartford that started such a great day for KYEstates. Thanks to Suzy for her email, and thanks to everyone in the Connecticut T&E Community who stopped by the site. In Kentucky we pride ourselves on hospitality, and hope you’ll return often.