Senate kills repeal of tax

Republicans vow to keep pursuing end to levy on large inheritances

June 09, 2006|By RICHARD SIMON | RICHARD SIMON,LOS ANGELES TIMES

WASHINGTON -- The long-standing Republican drive to permanently abolish the federal estate tax came up short in the Senate yesterday, the latest in a string of defeats for key elements of the GOP agenda.

Repeal of the estate tax, which applies to large inheritances and affects only a small segment of the population, was waylaid on a procedural vote. But Republican senators vowed to continue the fight.

"We're bullheaded or we wouldn't be here," said Sen. Trent Lott, a Mississippi Republican.

Some lawmakers remained hopeful that they could reach a bipartisan compromise that would reduce rather than eliminate the tax.

But striking a deal is certain to be difficult in an election year, especially with Democrats bidding to take control of at least one chamber of Congress in November's vote.

"The Senate's pretty partisan right now," Lott said.

Supporters of ending the estate tax, a move strongly backed by President Bush, fell just short of winning the 60 votes they needed to end debate on the issue. The largely party-line tally on scheduling the matter for a vote was 57-41.

The Senate has proved the killing ground for several GOP initiatives.

Last month, a Republican-sponsored bill to limit medical malpractice lawsuits failed in the Senate. This week, a constitutional amendment to ban same-sex marriage - a priority for social conservatives who are influential within the GOP - was blocked. Similarly, a constitutional amendment to ban flag burning is expected to be debated - and then shunted aside - next week.

"The conservative base will appreciate the fact that we are trying," Lott said.

He contended that the Democratic resistance to repealing the estate tax was part of a strategy to "keep the Senate from achieving anything" in hopes Republicans would "get the blame for not producing results."

He predicted the strategy would fail. Voters, he said, "can look and see where the problem is."

Within hours of yesterday's vote, Republicans were distributing statements attacking Democrats as obstructionists.

Democrats have countered that voters want Congress to deal with other issues, such as gasoline prices and the federal budget deficit, rather than a tax expected to apply to less than 1 percent of the people who die this year.

"There are a number of difficult issues facing the people of Nevada, but issues like estate tax are not high on that list," said Senate Minority Leader Harry Reid, a Nevada Democrat. "We are wasting precious days when there are so many other matters that deserve and demand our attention."

This echoed arguments made by Democrats opposing the proposed amendment to ban same-sex marriage.

The push to eliminate what many Republican lawmakers refer to as the "death tax" gained momentum in recent years, thanks in part to a coalition of wealthy families, small-business owners and farm groups.

Under the Bush-backed tax cut measure that became law in 2001, the estate tax is gradually declining and due to be eliminated in 2010. But in 2011, it will revert to the rate that existed before the law.

The House voted in April 2005 for its permanent abolition. The Senate seemed prepared to do the same in September, but the federal costs caused by Hurricane Katrina led the chamber's GOP leaders to postpone a vote.

Only 12,600 estates will be taxed this year, according to the Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution.

"This is the ultimate special interest bill," said Sen. Richard J. Durbin, an Illinois Democrat and one of the opponents of ending the tax.

Sen. Jon Kyl, an Arizona Republican and one of the leading backers of repeal, responded, "The special interests we're trying to protect here are the family-owned businesses, the family farms."

Proponents also argued that the tax indirectly affects many citizens who spend thousands of dollars on estate planning to eliminate a tax bill for their heirs.

One possible compromise calls for taxing at 15 percent to 30 percent estates that total more than $5 million for an individual and $10 million for a couple.

Estates worth less than $2 million for an individual and $4 million for a couple are exempt from the tax. Estates above those totals are taxed at 46 percent.

In 2011, the tax would be reimposed on estates valued over $1 million, and the top rate would revert to 55 percent.

Richard Simon writes for the Los Angeles Times.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.