Closer To Breaking The Deadlock?

Negotiations are under way because Democrats have the votes to block repeal, which has been approved in the House in each of the sessions in Congress since a phased-in repeal was included in the 2001 tax bill. And some Republicans also are concerned about the assault on Treasury revenues that would occur if indeed the estate tax is totally repealed.

The estimated cost of total repeal is $745 billion over the first 10 years.

David Stertzer, executive vice president of the Association for Advanced Life Underwriting, based in Falls Church, Va., said, "AALU consistently has promoted sustainable reform as the best long-term solution to the estate tax issue."

He added, "We are encouraged that repeal advocates have begun to talk earnestly about reform and we welcome the opportunity for the Congress to provide long-term certainty to this important issue."

It is important, however, Stertzer said, "that in the course of reform discussions, the Senate focus on the long-term revenue impact of whatever reform proposal is considered.

"It is my understanding that the reform proposals that would provide a $5 million or $10 million individual exemption and a capital gains rate will lose remarkably similar amounts of revenue as repeal," Stertzer said.

Kyl, along with the wealthiest Americans, is pushing for repeal now because, as his spokesman notes in confirming that talks are under way, "people need certainty as to what it would be going forward."

However, industry lobbyists say the issue is being pushed now because all of the Bush administration tax cuts sunset in 2009 and because the alternative minimum tax engulfs more and more middle-class Americans every year, and could become a huge political issue by 2009.

In a recent statement to members, AALU and National Association of Insurance and Financial Advisors officials said, "While talks are at their preliminary stages, we do know that key moderate Republican senators have been in meetings on the subject, and momentum may be gathering behind this effort."

An amendment to the energy bill filed by Sen. Jon Kyl, R-Ariz., would raise the threshold for taxing estates going forward to $10 million a person, with estates above that taxed at the 15% capital gains rate.