Supporters of a bill that would end the estate tax are touting the fact that the measure has attracted more than 200 House sponsors.
As its name implies, the Death Tax Repeal Permanency Act (
H.R. 1259) would eliminate the estate tax and lock in the current 35% tax rate and the $5 million exemption that applies to gifts. That rate and exemption currently apply to estates. If Congress doesn't act by the end of the year to extend them, the rate would balloon to 55% and the exemption would fall to $1 million.
Estate taxes are one of several Bush administration tax breaks that are set to expire on Jan. 1. Congress likely will wait to address the Bush tax cuts in a lame-duck session after the November elections.
In the meantime, proponents of the estate-tax bill are waving around the co-sponsor list as evidence that the bill has strong support in the House, where passage would be assured with 218 or more votes.
“The death tax remains the number one reason family-owned businesses and farms can't be passed down to their children,” the bill's author, Rep. Kevin Brady, R-Texas, said in a statement issued by the American Family Business Institute, which is pushing the bill. “Reaching this important milestone of over 200 sponsors shows overwhelming support for repealing this terrible tax.”
It can be misleading, however, to read too much into bill co-sponsorships. For instance, Mr. Brady's legislation has the support of 202 House members, but the vast majority of them are Republicans. Democrats are likely to resist.
It's unclear whether a House vote will occur this year, as Congress seems inclined to put off most heavy lifting on taxes until after the elections. Even if the House approves the bill, it would likely run into a wall of Democratic opposition in the Senate, where the party is guaranteed to hold the majority through the lame duck session.
What Mr. Brady's bill is doing right now is making a political statement about where many House Republicans are on the estate tax issue. Democrats have introduced their own tax bills that lay down political markers.
For instance, Sens. Sheldon Whitehouse, D-R.I., Daniel Akaka, D-Hawaii, and five other Democrats and an Independent who caucuses with the Senate Democrats introduced the Paying a Fair Share Act (
S.2059) on Feb. 1. The bill would levy a minimum 30% tax rate on people earning more than $1 million annually, effectively legislating the so-called Buffett Rule.
The bill has 11 Senate co-sponsors and a similar House measure has 15 co-sponsors – all Democrats. The bills may come up in House and Senate debates this year, but there's no chance that Republicans in either chamber would allow passage.
In this case, don't be fooled by the modest number of co-sponsors. Both Buffett-Rule bills would likely get almost uniform Democratic support if the party used them to make a political statement during this election season.
Another statement bill was introduced in mid-December by Rep. Sander Levin, D-Mich., the ranking member of the House Ways & Means Committee. His Carried Interest Fairness Act of 2012 (
H.R. 4016) would tax as ordinary income the 20% of profits that private fund managers typically take from a fund. Currently, that fee, known as carried interest, is taxed at the capital gains rate of 15%.
The bill has only one co-sponsor so far. But Mr. Levin has offered similar legislation that passed the House four times between 2007 and 2010. With the controversy over Republican presidential hopeful Mitt Romney's use of carried interest to build his approximately $250 million in net worth, Mr. Levin's bill probably would get bipartisan support this time around.
Finally, there is a bill that's been written by Sen. Michael Crapo, R-Idaho, that would keep the tax rates on capital gains and dividends at their current 15% level permanently. That bill (
S. 1647 has only five co-sponsors. But if it starts to move through committee and toward the Senate floor, Mr. Crapo is likely to garner a slew of Republican – and some Democratic – supporters.
When handicapping bills, potential political momentum means as much as the number of lawmakers signed on at any given moment.
