Lincoln, Kyl introduce estate tax fix

Sens. Blanche Lincoln (D-Ark.) and Jon Kyl (R-Ariz.) introduced legislation late Tuesday creating a permanent fix for the estate tax.

Their proposal would require Democratic leaders to amend the small-business jobs bill with a provision that sets the estate tax at 35 percent with a $5 million exemption. These amounts will be phased in over a 10-year period and also be indexed for inflation. In addition, inherited assets would be taxed at their worth upon transfer, not when the deceased purchased them.

The senators have tried for two years to permanently fix the estate tax. But with the tax being repealed in January, efforts to do something have become more urgent, as lawmakers on both sides of the aisle do not want the estate tax to return to pre-2001 levels, which is scheduled to occur in 2011 when estates worth more than $1 million will be taxed at 55 percent.

"It's time to take decisive action on the estate tax and provide the permanent solution that Arkansas's hardworking farmers and small businesses are desperately seeking," Lincoln said in prepared remarks.

Still, it is not clear if Senate Majority Leader Harry Reid (D-Nev.) will allow a vote on the amendment. He has limited the number of amendments that can be added to the bill, though Republicans will be allowed to offer some.

Kyl believes their estate tax fix is the perfect fit for the small-business bill.

"If the Small Business Lending bill is intended to help small business create jobs, wouldn't it make sense to provide small-business owners with the certainty that their tax rates aren't going to skyrocket at the beginning of next year?" Kyl said in prepared remarks. "In just six short months, American taxpayers will face the largest tax hike in history unless Congress acts."

Reid has already signaled that the small-business bill will be one of three proposals that will pass his chamber before the August recess. It will likely be the last legislative train to leave Capitol Hill, as lawmakers will be focused on November's elections in the fall.