CHN: Estate Tax Vote Postponed
As late as September 5, the night before Congress returned from a month-long recess, Senate Majority Leader Bill Frist (R-TN) was placing a repeal of the estate tax at the top of the Senate agenda. At the urging of Minority Leader Harry Reid (D-NV) and others in his own party, Frist scrapped those plans to focus on hurricane relief.
A vote on full repeal of the estate tax (or a dramatic reduction of the tax) has been put off indefinitely. Presumably Senator Frist wanted to spare lawmakers the discomfort they may feel in voting to give huge tax breaks to multi-millionaires such as the Mars family, the Gallo family and heirs of the Wal-Mart fortune while images of hurricane victims remained fresh in the memory of voters.
One stalwart opponent of the estate tax, Senator Jon Kyl (R-AZ), continues to push for a vote in October. At this point it appears there are not the necessary 60 Senators in favor of full repeal. The Center on Budget and Policy Priorities estimates that full repeal would cost about $1 trillion over the first ten years (2012-2021). However, Senator Kyl proposes a “compromise” that would dramatically reduce the estate tax. His plan would lift the exemption for individuals to $8 million (the current level is $1.5 million and rises to $3.5 million in 2009) and ties the rate to the 15 percent rate on capital gains and dividends (current top rate is 47 percent, phasing down to 45 percent in 2009.) The Center on Budget and Policy Priorities estimates that Senator Kyl’s proposal would cost $595 billion during its first ten years when fully in place.
Only the wealthiest taxpayers are subject to the estate tax – 99 percent of estates do not pay any estate tax. Under current law, the estate tax is reduced gradually through 2009 and repealed fully in 2010. The following year it is set to return to its 2001 level if Congress takes no action.