CHN: Estate Tax Repeal Averted – Threats Still Loom
Last week a key procedural vote on the estate tax in the Senate provided a huge victory for those who oppose estate tax repeal. Now members of the Senate are working on alternatives that could be almost as bad. The vote on a motion to proceed with consideration of estate tax repeal, which required 60 Senators to agree, failed 57-41. All Democrats except Baucus (MT), Lincoln (AK), Nelson (FL), and Nelson (NE) voted against the motion. All Republicans except Chafee (RI) and Voinovich (OH) voted for the motion to proceed. Independent Jeffords (VT) voted against. Not present were Rockefeller (D-WV) and Schumer (D-NY).The vote affirms that there are not 60 votes in the Senate for full repeal of the estate tax. However, both Republicans and Democrats seeking reductions in the estate tax are continuing to work on proposals short of full repeal that could be brought up at any time if an agreement is reached that is supported by 60 Senators. Alternatively, the Republican leadership could choose to attach estate tax repeal to conference committee reports of other bills on their way to final passage in the House and Senate. Such a move could be problematic because members may not want to vote against the base bill.
Senator Kyl (R-AZ), a staunch advocate of repealing the estate tax, recently floated a proposal to increase the estate tax exemption to $5 million for an individual and $7 million for a couple (now $2 million for an individual and $4 million for a couple) and drop the highest rate from 46 percent to 15percent. It is important to note that because the maximum rate is only applied to the remainder of the estate after subtracting the exempted amount and applying other tax breaks, the average estate tax liability for all estates subject to the tax now is less than 19 percent, and significantly less than that for smaller estates. Kyl proposes dropping the rate from 46 percent to 30 percent for amounts exceeding $30 million in larger estates. His proposal loses three-fourths as much revenue as the 10-year $1 trillion cost of fully repealing the estate tax.
This and similar proposals remain irresponsible and unaffordable. The Americans for a Fair Estate Tax, of which the Coalition on Human Needs is an active member, opposes tax cuts for millionaires while services for low and moderate income families are being cut. It specifically opposes a cut in the estate tax maximum rate that results in a dramatic loss of revenue.
On June 1, a letter was sent to all Senators signed by over 740 national, state and local organizations opposing repeal or changes that drastically reduce revenue from the estate tax. Tens of thousands of emails were also sent to Senators. See letter and list of signers.