Republicans' effort to abolish estate tax is rebuffed
Republicans' effort to abolish estate tax is rebuffed
By Edmund L. Andrews. Copyright by The New York Times
Published: June 8, 2006
WASHINGTON The Senate on Thursday rejected a major Republican effort to eliminate the estate tax on inherited wealth. The vote was a big defeat both for President George W. Bush and for Senate Republican leaders, who had framed their opposition to what they called the "death tax" as a popular and even populist crusade.
Sixty votes were required to end debate on the bill and prevent a filibuster, but the measure got only 57, with 41 Senators voting against and 2 not voting. Only a few crossed party lines.
Although a handful of lawmakers continued to search for a compromise that could pass, negotiators appeared unable to reach a deal before the end of this week, if ever.
"We were foreseeing ourselves putting this over the line," said Dick Patten, executive director of the American Family Business Institute, a group that has led much of the political campaign against the estate tax.
The Senate majority leader, Bill Frist of Tennessee, put his own reputation on the line by pushing ahead with the measure, even though he knew that Democrats and a few moderate lawmakers in his own party had a good chance of blocking its passage. "This death tax is unfair," Frist said on the Senate floor.
Frist, who had resisted efforts to hammer out a deal with conservative Democrats that would reduce the tax but not abolish it entirely, threw his support behind Republican negotiators on Wednesday and quietly promised that he would allow a floor vote on a compromise.
Few tax measures have generated as much passion among voters. Opponents have campaigned for its repeal for years, arguing that it endangers family-owned businesses and farms, that it discourages saving and investment, and that it forces people to spend billions of dollars a year on estate-planning efforts.
"It makes no sense that the United States, which should be a bastion of promotion for entrepreneurship, and certainly a bastion that supports the family farm, the family restaurant, the family gas station, the family entrepreneur, is taxing those families at a rate which is higher than the French," said Senator Judd Gregg, Republican of New Hampshire.
Democrats argued with equal vehemence that repealing the estate tax would provide a windfall to the nation's richest families and widen the federal budget deficit at precisely the time when the baby-boom generation starts running up the cost of old-age programs like Social Security and Medicare.
Under current law, which was part of Bush's tax-cut package of 2001, the estate tax is set to decline and eventually disappear entirely, in 2010, but resume in its entirety in 2011. At the moment, the government imposes a tax of about 46 percent on estates worth more than $2 million, or more than $4 million in the case of couples.
A repeal of the estate tax would cost more than $700 billion in the first 10 years after it became effective in 2011, according to the Joint Committee on Taxation. Supporters of repeal say the cost would be far less, in part because it would spur new investment and in part because it would eliminate a major incentive for tax avoidance. But opponents of repeal contend that the cost could top $1 trillion, counting the higher interest expense of bigger budget deficits.
By Edmund L. Andrews. Copyright by The New York Times
Published: June 8, 2006
WASHINGTON The Senate on Thursday rejected a major Republican effort to eliminate the estate tax on inherited wealth. The vote was a big defeat both for President George W. Bush and for Senate Republican leaders, who had framed their opposition to what they called the "death tax" as a popular and even populist crusade.
Sixty votes were required to end debate on the bill and prevent a filibuster, but the measure got only 57, with 41 Senators voting against and 2 not voting. Only a few crossed party lines.
Although a handful of lawmakers continued to search for a compromise that could pass, negotiators appeared unable to reach a deal before the end of this week, if ever.
"We were foreseeing ourselves putting this over the line," said Dick Patten, executive director of the American Family Business Institute, a group that has led much of the political campaign against the estate tax.
The Senate majority leader, Bill Frist of Tennessee, put his own reputation on the line by pushing ahead with the measure, even though he knew that Democrats and a few moderate lawmakers in his own party had a good chance of blocking its passage. "This death tax is unfair," Frist said on the Senate floor.
Frist, who had resisted efforts to hammer out a deal with conservative Democrats that would reduce the tax but not abolish it entirely, threw his support behind Republican negotiators on Wednesday and quietly promised that he would allow a floor vote on a compromise.
Few tax measures have generated as much passion among voters. Opponents have campaigned for its repeal for years, arguing that it endangers family-owned businesses and farms, that it discourages saving and investment, and that it forces people to spend billions of dollars a year on estate-planning efforts.
"It makes no sense that the United States, which should be a bastion of promotion for entrepreneurship, and certainly a bastion that supports the family farm, the family restaurant, the family gas station, the family entrepreneur, is taxing those families at a rate which is higher than the French," said Senator Judd Gregg, Republican of New Hampshire.
Democrats argued with equal vehemence that repealing the estate tax would provide a windfall to the nation's richest families and widen the federal budget deficit at precisely the time when the baby-boom generation starts running up the cost of old-age programs like Social Security and Medicare.
Under current law, which was part of Bush's tax-cut package of 2001, the estate tax is set to decline and eventually disappear entirely, in 2010, but resume in its entirety in 2011. At the moment, the government imposes a tax of about 46 percent on estates worth more than $2 million, or more than $4 million in the case of couples.
A repeal of the estate tax would cost more than $700 billion in the first 10 years after it became effective in 2011, according to the Joint Committee on Taxation. Supporters of repeal say the cost would be far less, in part because it would spur new investment and in part because it would eliminate a major incentive for tax avoidance. But opponents of repeal contend that the cost could top $1 trillion, counting the higher interest expense of bigger budget deficits.
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