Minority Whip Jon Kyl (R-Arizona) is pushing to add repeal of the Estate Tax to a small business bill coming soon to the floor of the US Senate.

Currently, there is no estate tax, because it expired at the end of 2009. But, if Congress does not act, it will return even stronger in 2011, when the top tax rate will jump to 55 percent and the per-person exemption will be set at $1 million.

Kyl has been working for more than a year with Senator Blanche Lincoln (D-Arkansas) on an approach that would result in a top estate tax of 35 percent and a per-person exemption of $5 million. Those numbers are significantly more generous to estate owners than the bill, H.R. 4154, passed by the House late last year, which would reset the parameters at the 2009 levels of 45 percent and $3.5 million.

Still, both the Lincoln-Kyl and the House bill face a significant problem: Under the pay-as-you go law (PL 111-139), changes to the estate tax beyond 2011 would require hundreds of billions of dollars in offsets. Senate leaders plan to bring a package of small business tax breaks and lending assistance to the floor after it finishes work on a tax and benefits package currently under debate. The PAYGO budget requirement could be waived with 60 votes in the Senate, but Senators have spent the last week insisting unemployment benefits, COBRA health insurance subsidies for laid off workers and Medicaid assistance to states must be paid for.

Lincoln and kyl plan to pay for the difference between their amendment and the House bill by finding offsets in the part of the tax code governing estates and gifts. No one has yet disclosed a vote count in the Senate on the Lincoln-Kyl amendment, but most believe the Senate Finance Committee Democrats and Republicans support the estate tax amendment.

MRAA sent a letter to the Senate, signed onto a newspaper advertisement with the NFIB, and will continue to closely watch the Estate Tax repeal issue.