House members again vote for permanent repeal of federal estate tax

But filibuster threat gives bill little chance in Senate

April 14, 2005|By NEW YORK TIMES NEWS SERVICE

WASHINGTON - For the fourth time in four years, the House voted yesterday to repeal the federal estate tax permanently, a central element of President Bush's economic agenda.

The measure, approved 272-162, stands little chance in the Senate because of the threat of a filibuster, which Democrats have used to block similar bills in the past. But Senate Republican leaders are exploring the possibility of a compromise, and Democratic leaders have said that they are willing at least to talk about the matter.

Most Democratic lawmakers want to retain the tax on the very largest estates and argue that the money the tax generates could be used to bolster the Social Security system.

A Democratic amendment to extend the estate tax while exempting all but the three-tenths of 1 percent of estates valued at more than $3.5 million ($7 million for a couple) was rejected on a largely party-line vote.

The tax reduction law enacted in 2001 provided that the estate tax, assessed then at a top rate of 55 percent on all estates larger than $675,000, would be reduced in increments.

This year, the top rate is 47 percent, and estates smaller than $1.5 million are exempt. In 2009, the tax is to be levied only on estates worth more than $3.5 million, and at a top rate of 45 percent. (All exemption figures are doubled for couples.)

In 2010, the estate tax is to be eliminated altogether. But then, in 2011, the old law with a 55 percent rate and a $675,000 exemption is to go back into effect.

With President Bush barnstorming the country in an effort to persuade Americans that the Social Security system is on the verge of insolvency, Democrats are arguing that the tax revenue saved by retaining the estate tax on just the largest three-tenths of 1 percent of estates would offset at least a quarter, and possibly as much as half, of the Social Security shortfall over the next 75 years.

Retaining the estate tax would "strengthen Social Security for generations to come," said House Democratic leader Nancy Pelosi of California.

The chief sponsor of the measure to repeal the tax, Rep. Kenny Hulshof, a Missouri Republican, dismissed Pelosi's argument as a "red herring."

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