Amadeusz Juskowiak

Key us tax writers seek estate tax curbs

The chairmen and senior Republican members of the House and Senate tax writing committees proposed legislation to curb estate tax deduction on sales of stock to an employee stock ownership plan

The proposal would raise federal revenues of 67 billion dlrs over the fiscal year period 1987 to 1991

If adopted by Congress it would effect all transactions after Sept 26 1987

The plan was proposed by House Ways and Means Committee Chairman Dan Rostenkowski DIll Rep John Duncan RTenn Senate Finance Committee Chairman Lloyd Bentsen DTex and Sen Bob Packwood ROre

In a statement Rostenkowski said the estate tax deduction enacted last year as part of the tax reform bill was too broad and would have cost the governmet seven billion dlrs over four years The narrower deduction would cost the government less than 300 mln dlrs for the same years

He said it was designed to avoid sham transactions which allowed estates to avoid taxes by transferring stock to ESOPs

Senate Finance Committee chairman Lloyd Bentsen said in a statement The Tax Reform Act contains a provision that allows many wealthy individuals to avoid the federal estate tax entirely when they die

He added The provision was intended to encourage estates to sell stock to employee stock ownership plans as a way of promoting worker ownership however the provision was not meant to be broad enough to reduce federal revenues as much as is currently estimated

He added The bill I have introduced today calls for the modification of the provision in accordance with its intended purpose