US Senators Seek Permanent Repeal Of Estate Tax

by Mike Godfrey, Tax-News.com, Washington

07 March 2005

U.S. Senators Jon Kyl (R – Arizona) and Bill Nelson (D – Florida) have moved a step closer to achieving their goal of permanently eliminating US estate tax after introducing legislation in the Senate last month.

Estate tax is set to be incrementally phased out over the next five years under legislation passed in the 2001 package of tax cuts. However, this relief will only be temporary as the tax is set to re-emerge at the pre-tax-cut rate in 2011.

While many Republicans in the Senate are keen to abolish the tax, it is unclear whether the political will exists for a permanent repeal of the estate tax laws given its estimated $256 billion price tag.

However, after weeks of negotiations with US Senate Minority Leader Harry Reid (D – Nevada), Kyl has expressed confidence that a satisfactory compromise can be reached, and that he has enough votes to see through his proposal.

“The death tax is unfair, inefficient, economically unsound and, frankly, immoral,” Kyl remarked last month, adding that: “Even though most Americans are unlikely to be subjected to it, most agree that it is fundamentally unfair to allow the federal government to seize more than half of a person's assets when he or she dies.”

Kyl continued that: “It’s such bad policy that economists Gary and Aldona Robbins estimate that repealing the death tax would actually increase gross domestic product, to such an extent that within ten years overall federal tax revenue would actually be higher than before.”

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