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Summary

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Tax Relief Reconciliation Act of 2001 (EGTRRA, P.L. 107-16, enacted June 7, 2001), the estate tax is scheduled to be repealed in 2010 but reinstated in 2011. 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 the estate tax or to retain but alter the tax. Thus far in the 108th Congress, eight bills involving the estate tax have been introduced in the House and five in the Senate. The bills can be grouped under four broad categories. First, three House bills, H.R. 25 (Linder), H.R. 269 (English), and H.J.Res. 15 (Paul) would repeal the estate tax as part of a major overhaul of the federal tax system. Second, three other House bills, H.R. 57 (Dunn), H.R. 139 (McGinnis), and H.R. 158 (Pitts), would make the repeal of the estate tax permanent after 2010, by removing the sunset provision for the estate tax provisions of EGTRRA. The revenue cost for FY2012 from permanent repeal has been estimated at $48 billion by the U.S. Treasury Department and $58 billion by the Joint Committee on Taxation. Third, 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. H.R. 51 (Cox) would repeal the gift tax along with the estate tax effective in 2003. S. 13 (Kyl) and S. 169 (Kyl) would accelerate the repeal of the estate tax to 2005 and make the repeal permanent by removing the sunset provision solely with respect to the estate tax provisions of EGTRRA. S. 96 (Kyl) would accelerate the repeal of the estate tax to 2005 as well. In addition, it would repeal the sunset for all provisions of EGTRRA; accelerate the scheduled income tax rate reductions; and introduce other provisions favorable to investments and retirement plans. Fourth, three bills ­ one in the House and two in the Senate ­ would retain but alter the estate tax. Two would increase the exclusion amount for all estates; two would repeal the estate tax for qualified family-owned business interests; one would do both. H.R. 396 (DeFazio) would retain the estate tax but increase the exclusion amount to $5 million starting in 2004, keep the maximum estate tax rate at its 2003 level of 49%, and repeal the modified carryover basis (and keep stepped-up basis). It would also freeze EGTRRA's reduction of the top individual income tax marginal rate at its 2003 level of 38.6%. S. 34 (Lincoln) would immediately and permanently repeal the estate tax on family-owned businesses and farms. Carryover (not steppedup) basis would be used to calculate the capital gain if the beneficiary later sold the family-owned business interest. In contrast, S. 135 (Dayton) would eliminate EGTRRA's institution of carryover basis (and retain stepped-up basis). It would immediately increase the exclusion amount for all estates to $4 million and provide a complete estate tax exclusion for family-owned businesses. It would also expand the 10% tax individual income tax bracket, freeze the rate decline for the top income tax brackets, and address other income tax issues. This report will be updated as events warrant.

Related Legislation:
• H.R.25
• H.R.269
• H.R.57
• H.R.139
• H.R.158
• H.R.51
• S.13
• S.169
• S.96
• H.R.396
• S.34
• S.135
• H.J.RES.15
• S.2003

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