On Tuesday November 15th CGP’s contact in Washington, Perry Wasserman, provided a post-election update on 2017 tax issues and the “lame duck” session. Below, Perry answers CGP member's questions from the webinar.
Do you anticipate a successful move to end or dramatically reduce estate taxes?
The short answer is it’s possible, some may even say probable, that the estate tax is repealed or dramatically reduced this year. At this point, President-elect Trump and Congressional Republicans have indicated a desire to tackle tax reform within the first half of 2017, and such legislation could be accomplished in one of two main ways.
First, lawmakers could attempt to move bipartisan tax reform legislation through regular order. This legislation would need to have the support of at least 60 Senators, though, meaning at least eight Democrats would have to agree to ultimately support the legislation or, at the very least, agree not to hold it up. If tax reform legislation moves through regular order, which is possible because there are a handful of Democratic Senators up for re-election who will want to support the legislation particularly if it includes a business tax cut, the estate tax could potentially survive in one form or another, but a lot will depend on the scope of the legislation and the way negotiations unfold.
A second way lawmakers could move tax reform legislation in the first-half of 2017 is through a complicated budget maneuver called “reconciliation.” Under reconciliation, legislation would be fast-tracked and only require 51 votes in the Senate for approval. (One down side to reconciliation is it would put a 10-year limit on any enacted tax cuts.) Many in DC expect Republicans to go this route if/when the bipartisan talks described above break down. If Republicans pursue reconciliation to reform the tax code, the estate tax would likely be eliminated because the President-elect Trump and House Republicans favor repeal. And under reconciliation, Republicans would not have to appeal to Democrats for votes.
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If Republican leadership decides to wait on tax reform or pursue business-only tax reform first, then the estate tax may survive another year.
Do you expect the IRA Charitable Rollover to be affected by the new administration?
President-elect Trump, to our knowledge, has not taken a position on the current-law IRA Charitable Rollover. If tax reform proceeds next year (see comments above), we are hopeful the Rollover will remain in the law given the great support it has in Congress but we will have to remain vigilant. Depending on how the tax reform process unfolds, we may even be able to advocate for an expansion of the Rollover along the lines of the Legacy IRA Act (HR 5171) or the Grow Philanthropy Act (HR 4907).
Is the IRA Legacy Act (HR 5171) and/or related pending legislation dead now in light of the 2017 tax reform that is coming? Or do you think that the expansive provisions related to so-called charitable IRA rollover will be morphed into 2017 tax reform?
Because Republicans kept control of the House and Senate and took back the White House, it is increasingly unlikely that a tax bill will move at the end of this year during the “lame duck” session. This means that legislation like the Legacy IRA Act is very unlikely to get a vote. As noted above, depending on how the tax reform process unfolds early next year, we may have an opportunity to push for an expansion of the Rollover.
Be sure to check out the CGP Advocacy page for updates and related news as we move through this post-election season.