September 8, 2005--The U.S. Senate will delay voting on the future of the estate tax in the wake of Hurricane Katrina, Senate Majority Leader Bill Frist announced Monday.
Other federal tax cuts have also been postponed as recovery costs grow.
Frist had called a vote on whether to permanently repeal estate taxes "first order of business" when the Senate returned this week from the annual August recess. The bill, a main plank in the Republican's tax-cutting agenda, will now be temporarily shelved.
The move came just hours after Senate Minority Leader Harry Reid, of Nevada, urged Republican lawmakers to back off of planned tax cuts in the aftermath of last week's storm, which Senate leaders are estimating may cost upwards of $200 billion. Reid instead called for a shift in priorities to the needs of victims in Mississippi, Louisiana and Alabama. Voting on the estate tax so soon, Reid told reporters Monday, would be "a travesty on top of a tragedy."
Congress has also put off a $70 billion package of tax cuts, part of a larger tax simplification plan, until next month. The last two meetings of President Bush's tax-reform panel have also been postponed, pushing back its final report, which had been set for Sept. 30.
The estate tax, which taxes the transfer of assets exceeding $1.5 million after deductions at the time of death, is being phased out over the next few years, and will be repealed in 2010 for one year. Exemption levels are set to rise annually until then.
Reid and other Democrats have argued that the tax in its current form favors the rich and deepens federal budget deficits. According to the Internal Revenue Service, only the wealthiest 2% of all Americans are affected. A Congressional Budget Office report issued earlier this summer claimed that most farmers and small business owners were exempt.