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House Passes Estate Tax Repeal Bill, But Its Future Is Uncertain

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JUNE 12, 2000 VOLUME 7, NUMBER 50

The big news in the elder law and estate planning field this week was the Friday passage (by the House of Representatives) of a bill to repeal the federal estate tax. The vote to repeal was lopsided, with a 279-136, with 65 Democrats joining the Republican majority. Does this mean that the estate tax will soon be history?

Despite the strong (and bipartisan) vote to repeal the estate tax, the issue is far from resolved. President Clinton has clearly indicated his intention to veto the current bill if it passes the Senate, characterizing the repeal as a Republican tax break for the very wealthy.

If Congress wants to override Clinton’s expected veto, it will need to muster 2/3 votes in both houses. Friday’s vote was just over 2/3 in favor of repeal, but there were 20 Representatives not voting. In a veto override vote, some of those voting in favor Friday might choose not to confront the President. In other words, even with Senate approval the repeal is still far from assured.

Cynical observers chalk the entire exercise up to election-year politics. With last week’s vote, the Republican majority (and the Republican presidential candidate) can campaign on a platform of attempted tax cuts. Democrats, equally disingenuous, can claim to be protecting the poor and middle class from Republican attempts to give special treatment to the very wealthy.

The estate tax has become a major campaign issue despite the fact that it directly affects only about 2% of estates—43,000 of the 2.3 million deaths in 1997 lead to payment of estate taxes. Indirect effects are somewhat more widespread, with many middle-class families spending at least some money on estate tax planning. Republicans point to another indirect cost—the sale of some family businesses forced by inability to pay the estate tax on the death of the family patriarch or matriarch.

The loss of tax revenue from repeal of the estate tax would be substantial. The Republican bill passed last week would cost over $100 billion during the ten-year phase-in period, and lost revenue after that would be about $50 billion each year. Republicans insist, however, that the federal government can forego that tax revenue and still offer a substantial additional tax cut from income and excise taxes.

Reports about the repeal of the estate tax usually overlook another issue: the current bill would restore an unpopular tax from an earlier era. Current income tax law exempts the gains in value of property received by inheritance. The House bill would impose a new capital gains tax on that lifetime growth in value. That tax would be limited to 20% (under current tax rates), and would only apply to total gains over $1.3 million for each decedent’s estate. The change, say some critics, would introduce new record-keeping requirements and planning complexities.

Politicians, lobbyists and pundits have lined up to debate the merits and drawbacks to the current estate tax system. Excellent arguments in favor of continuation of the tax can be found in an online article by the Center on Budget and Policy Priorities, and a compelling case against the estate tax is made (also online) by the Joint Economic Committee of Congress.

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Robert B. Fleming

Attorney

Robert Fleming is a Fellow of both the American College of Trust and Estate Counsel and the National Academy of Elder Law Attorneys. He has been certified as a Specialist in Estate and Trust Law by the State Bar of Arizona‘s Board of Legal Specialization, and he is also a Certified Elder Law Attorney by the National Elder Law Foundation. Robert has a long history of involvement in local, state and national organizations. He is most proud of his instrumental involvement in the Special Needs Alliance, the premier national organization for lawyers dealing with special needs trusts and planning.

Robert has two adult children, two young grandchildren and a wife of over fifty years. He is devoted to all of them. He is also very fond of Rosalind Franklin (his office companion corgi), and his homebound cat Muninn. He just likes people, their pets and their stories.

Elizabeth N.R. Friman

Attorney

Elizabeth Noble Rollings Friman is a principal and licensed fiduciary at Fleming & Curti, PLC. Elizabeth enjoys estate planning and helping families navigate trust and probate administrations. She is passionate about the fiduciary work that she performs as a trustee, personal representative, guardian, and conservator. Elizabeth works with CPAs, financial professionals, case managers, and medical providers to tailor solutions to complex family challenges. Elizabeth is often called upon to serve as a neutral party so that families can avoid protracted legal conflict. Elizabeth relies on the expertise of her team at Fleming & Curti, and as the Firm approaches its third decade, she is proud of the culture of care and consideration that the Firm embodies. Finding workable solutions to sensitive and complex family challenges is something that Elizabeth and the Fleming & Curti team do well.

Amy F. Matheson

Attorney

Amy Farrell Matheson has worked as an attorney at Fleming & Curti since 2006. A member of the Southern Arizona Estate Planning Council, she is primarily responsible for estate planning and probate matters.

Amy graduated from Wellesley College with a double major in political science and English. She is an honors graduate of Suffolk University Law School and has been admitted to practice in Arizona, Massachusetts, New York, and the District of Columbia.

Prior to joining Fleming & Curti, Amy worked for American Public Television in Boston, and with the international trade group at White & Case, LLP, in Washington, D.C.

Amy’s husband, Tom, is an astronomer at NOIRLab and the Head of Time Domain Services, whose main project is ANTARES. Sadly, this does not involve actual time travel. Amy’s twin daughters are high school students; Finn, her Irish Red and White Setter, remains a puppy at heart.

Famous people's wills

Matthew M. Mansour

Attorney

Matthew is a law clerk who recently earned his law degree from the University of Arizona James E. Rogers College of Law. His undergraduate degree is in psychology from the University of California, Santa Barbara. Matthew has had a passion for advocacy in the Tucson community since his time as a law student representative in the Workers’ Rights Clinic. He also has worked in both the Pima County Attorney’s Office and the Pima County Public Defender’s Office. He enjoys playing basketball, caring for his cat, and listening to audiobooks narrated by the authors.