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Julie Garber

Is Estate Tax and Income Tax Reform on the Horizon?

By February 4, 2013

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As the saying goes in Washington, everything is permanent until it is changed. So while it has been declared that the American Taxpayer Relief Act - also known as the "Fiscal Cliff Avoidance Act" - has provided permanency to the laws governing estate taxes, gift taxes and generation-skipping transfer taxes, take it for what it's worth. Estate tax laws, like all other laws, are permanent until Washington decides to change them. So it should come as no surprise that both the House and the Senate are working behind closed doors to come up with tax reform proposals that will be designed to completely overhaul the U.S. tax code.

To mark the 100th anniversary of the U.S. income tax on February 1, 2013, Senators Max Baucus (D-MT) and Orrin Hatch (R-UT) (Baucus is the Finance Committee chair and Hatch is the ranking Republican on the committee) and Representative Dave Camp (R-MI) (he's the House Ways and Means Committee chair) released the following statement: "Comprehensive tax reform can make the code simpler, fairer and easier to comply with, all of which can lead to families having more time, energy and money for what matters most - their families."

Finally moving full steam ahead after two years of hearings, on January 24 Camp released a financial products discussion draft which is a small part of his committee's broader commitment to comprehensive tax reform. Meanwhile Baucus hopes to have a draft of his tax reform proposal, which will include about two dozen different tax topics, ready in the spring. Many will recall that in late 2012 during the fiscal cliff negotiations Baucus went as far as saying that he supported complete repeal of the estate tax. This could mean that his tax overhaul proposal will include estate tax repeal coupled with things like keeping the lifetime gift tax intact and making changes to the income tax basis rules that apply to estates.

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