Advertisement
YOU ARE HERE: LAT HomeCollections

The Nation

Repeal of Estate Tax Is Latest GOP Initiative to Die in Senate

Some still hope to reach a compromise, but Republican legislation is having a hard time amid the election-year partisanship.

June 09, 2006|Richard Simon | Times Staff Writer

WASHINGTON — The long-standing Republican drive to permanently abolish the federal estate tax came up short in the Senate on Thursday, 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 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 (R-Miss.).

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

But striking a deal will be difficult in an election year, especially with Democrats hoping to take control of at least one chamber of Congress in November's vote. Said Lott: "The Senate's pretty partisan right now."

Supporters of the repeal, strongly backed by President Bush, needed 60 votes to end debate and schedule the issue for a vote. They garnered 57 to opponents' 41 in a largely party-line tally.

The Senate is proving to be a killing ground for recent GOP initiatives.

Last month, a Republican-sponsored bill to limit jury awards in medical malpractice lawsuits failed in the Senate. On Wednesday, a constitutional amendment to ban same-sex marriage -- a key 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 -- later this month.

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

He contended that 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."

Within hours of Thursday'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 repealing a tax expected to apply to less than 1% of the people who die in 2006.

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

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

Under the Bush-backed tax cut that became law in 2001, the estate tax is gradually declining and is due to be phased out entirely in 2010. But in 2011, it will revert to the rate that existed before the cutback was enacted.

The House voted in April 2005 to make the end of the tax permanent, and the Senate seemed prepared to do the same in September. But the costs associated with Hurricane Katrina led the chamber's GOP leaders to postpone the vote.

About 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 (D-Ill.), who opposes ending the tax.

Sen. Jon Kyl (R-Ariz.), a leading backer of a repeal, responded, "The special interests we're trying to protect here are the family-owned businesses, the family farms."

He said the tax indirectly affected many citizens who spent thousands of dollars on estate planning to eliminate a tax bill for their heirs: "A lot of people spend a fortune just trying to avoid the tax."

One possible compromise calls for taxing estates that total more than $5 million for an individual and $10 million for a couple at rates between 15% and 30%. Currently, 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%.

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

Republican Sens. George V. Voinovich of Ohio and Lincoln Chafee of Rhode Island broke party ranks to vote to block repeal of the tax.

Four Democrats supported scheduling a vote on the repeal: Sens. Max Baucus of Montana, Ben Nelson of Nebraska, Bill Nelson of Florida and Blanche Lincoln of Arkansas.

California's senators, Democrats Barbara Boxer and Dianne Feinstein, opposed scheduling a vote on the tax's repeal.

"I am no fan of the estate tax," Feinstein said. "But with the threatening fiscal demands of baby boomers and the pending insolvency of Medicare in less than two decades, repealing the estate tax today would be inconceivably shortsighted."

She added, "This is the wrong policy at the wrong time."

The Center on Budget and Policy Priorities estimates that in the decade after a repeal, the government would lose $776 billion in revenue.

*

(BEGIN TEXT OF INFOBOX)

10 years of cuts

President Bush decreased the estate tax through the decade that started in 2001 by gradually increasing the size at which an estate becomes exempt and gradually lowering the top tax rate. In 2010, the estate tax is repealed. But the law is only for the decade; the original tax reappears in 2011. Here are the estate size limits and top rates:

2002: $1-million exemption, 50% tax rate

* 2003: $1 million, 49%

* 2004: $1.5 million, 48%

* 2005: $1.5 million, 47%

* 2006: $2 million, 46%

* 2007: $2 million, 45%

* 2008: $2 million, 45%

* 2009: $3.5 million, 45%

* 2010: No estate tax

* 2011: $1-million exemption,

55% tax rate (reversion to system before Bush's cuts)

Associated Press

Advertisement
Los Angeles Times Articles
|
|
|