Senate Republicans Postpone Vote on Estate Tax
Acknowledging they lack the votes to proceed, Senate Republicans are postponing their efforts to permanently reduce the federal estate tax until after the Fourth of July weekend.
The bill, which passed the House by 269-156 last week, is a scaled back version of earlier legislation seeking to fully repeal the tax -- an effort that was blocked by a procedural vote in the Senate on June 8.
The estate tax, a tariff on multimillion dollar inheritances dubbed the "death tax" by opponents, is currently being phased out by 2010 under president Bush's tax relief bill, but is slated to return to its original levels the following year.
"The vast majority of my Democratic colleagues have so far refused to address this issue," Senate Majority Leader Bill Frist (R-Tenn.) said in a statement on Tuesday.
"It's my hope that their constituents will use the upcoming recess to explain the importance of supporting a reasonable and permanent solution to this unfair tax," Frist said.
Critics of the tax, including a number of small-business advocacy groups, say it unfairly targets asset-rich family businesses, which are forced to spend thousands of dollars more in legal fees for estate planning as a result.
The House bill would exempt estates under $5 million for individuals and $10 million for couples, from paying the tax. Those valued between $10 million and $25 million would pay the standard capital gains rate of 15%, while wealthier estates would pay up to 40%.
Currently, estates above $2 million are taxed at 46%. About 12,600 estates are expected to be subject to the tax this year, according to the Tax Policy Center, a tax policy watchdog group based in Washington.
The proposed cuts would reduce that number to just 2,800, the group says, and cost the government some $283 billion in tax revenue between 2006 and 2016, according to the Congress' Joint Committee on Taxation.
Critics of the bill say it's too costly, particularly at a time when the government is struggling with the rising costs of the war in Iraq and hurricane rebuilding efforts in the Gulf Coast, among other expenses.
"The Senate has repeatedly rejected repeal of the estate tax because it recognized that giving away hundreds of billions in tax breaks to the wealthiest among us was the wrong priority for America," Senate Minority Leader Harry Reid (D-Nev.) said in a statement.
"Today, the majority leader recognized that the phony House compromise would suffer the same fate for the same reason," Reid said.