Late last week, BNA reported that Senate Finance Committee Chairman Max Baucus (D-MT) indicated that he intends to draft legislation that would reinstate the estate tax retroactively, but that he was unsure when legislation might be ready for consideration on the floor. Baucus reiterated his hope that such legislation would be permanent and the potential that estate tax reform could be included in a larger package with other tax provisions. BNA also reported that Senate Majority Leader Harry Reid (D-NV) said timing of consideration was not imminent, but “over the horizon”.
On Monday Senator Reid introduced an amendment to the debt limit extension bill that would affect the degree to which estate tax reform would have to be offset. The amendment would allow a PAYGO adjustment for the difference between current law and an extension of the 2009 levels through 2010 and 2011 with indexing of the 2009 exemption for inflation in 2010 and 2011. Any additional difference, whether from a longer-term/permanent solution or more generous relief, would have to be offset or overcome objections with a 60-vote super-majority of the Senate. The amendment also contains PAYGO provisions that would apply to the consideration of legislation on Medicare physician payments, alternative minimum tax (AMT) relief and the 2001 tax cuts for those with incomes under $200,000 per year. As always, we’ll keep you posted.