WASHINGTON–Independent insurance agents are urging the Senate tosupport the comprehensive estate-tax reform legislation approvedoverwhelmingly by the House on Thursday.

In a statement, officials for the Independent Insurance Agents& Brokers of America said it “applauded” the House for passinga comprehensive estate-tax reform bill, which it called a“common-ground” solution to the estate-tax burden imposed on smallbusinesses.

“We will be working very hard to convince the Senate to moveforward,” said Charles E. Symington Jr., IIABA senior vicepresident for government affairs and federal relations. “Thislegislation is very important to our members and small-businesspeople across America.”

H.R. 5638, the “Permanent Estate Tax Relief Act,” was introducedMonday by Rep. Bill Thomas, R-Calif., chairman of the House Waysand Means Committee. It passed the House 269-156 on Thursday.

The legislation would exempt from tax estates worth up to $5million. It also would make it easier to pass on the full exemptionto a spouse, index the $5 million exemption to inflation, and taxassets beyond the exempted amount, up to $25 million, at the15-percent capital-gains tax rate.

Under existing law, the current estate tax relief will expireDec. 31, 2010. Without further legislation, some estate taxes wouldrevert to rates ranging from 20-to-40 percent.

The bill would allow heirs to have a “stepped-up” basis to suchassets as a small business. But at the same time, the newlegislation does not deduct from federal taxes the amount heirs payfor state taxes.

Analysts say this is a big factor for heirs living in suchstates as Washington and New York, and is making even conservativesenators who are highly supportive of repeal, or alternatively,reform of the tax, leery of the House bill.

The Senate could take up the bill as early as the end of June.Concerns by Democrats and some Republicans, however, are reducingthe odds the legislation would be enacted this year.

Alternatives to the House bill, under consideration by theSenate Republican leadership, include attaching a compromiseestate-tax reform bill to defined benefit pension reformlegislation, which is now being considered by a joint House-SenateReconciliation Committee. There could also be a compromise offeringto Democrats that would include increasing the minimum wage to$7.25 an hour in three steps.

The IIABA's position is that it supports the elimination, or atleast the significant reduction, of estate taxes to encourageinvestment and growth in small businesses.

“This is crucial to the 300,000 IIABA members across America,many of whom own their own agencies and whose families facesignificant tax burdens when these businesses are passed along totheir heirs,” IIABA officials said. “The prospect of heavy estatetaxes also diminishes the value of small businesses if they aresold,” IIABA officials pointed out.