To sweeten the pot [with respect to passage of the "Permanent Estate Tax Relief Act of 2006"], [Ways and Means Chairman Bill] Thomas added language to his bill that creates a new 60 percent deduction for qualified timber capital gains. This deduction alleviates the tax treatment of timber gains under current law (which is based upon the legal form of ownership of the underlying timber assets). The provision is effective for qualifying gains recognized from the date of enactment through calendar year 2008. The measure is sure to entice Democratic Senators like Patty Murray (D-WA) and Maria Cantwell (D-WA) whose constituents would benefit from such a provision.Emphasis added.
The staff of the Joint Committee on Taxation today issued an estimate of the revenue loss that the bill would cause. Over ten years, the estimate for the revenue loss from the estate tax portion of the bill is $279 Billion. The estimated revenue loss for the change in tax treatment of timber gains is only $940 Million. (Note: The revenue loss numbers for the change in tax treatment of timber gains from 2006 through 2016 is greater than $940 Million, but the losses for 2006 through 2008 are already part of the law, but the tax break "sunsets" after 2008. Thus, the net effect of the change which removes the sunset provision is the $940 Million.)
Somehow, this brings to mind the old joke where the question is raised: "Just what kinda girl do you think I am." and the punchline is: "We just established that, now we're only negotiating over the price."
Hat Tip on the Joint Committee Report to TaxProf.