CHN: House Passes Permanent Repeal of the Estate Tax
Senate to Consider Measure Before July 4th Recess
On June 6, the House voted, by a 256 to 171 margin, in favor of legislation (HR 2143) to make permanent a repeal of the estate tax. Last year, Congress passed and the President enacted budget reconciliation legislation (HR 1836) that would phase out the estate tax over the next decade, but without congressional action the phase-out will sunset in 2010.
The House vote was intended to pressure the Senate into passing a permanent repeal of the estate tax. However, the GOP-backed initiative has actually lost support since it last came to a vote; in April 2001, HR 8 garnered 274 favorable votes, while 154 members opposed it. Only 41 Democrats voted for repeal this time, compared to 58 last year.
The House defeated a substitute bill offered by Representative Earl Pomeroy (D-ND) that would have exempted from the estate tax assets up to $3 million for an individual (and up to $6 million for a couple); currently, individual assets up to $1 million are exempted from the tax. The substitute was defeated by a vote of 231 to 197.
Senate Majority Leader Daschle (D-SD) has agreed to schedule a vote on permanent repeal of the estate before the July 4th congressional recess. A number of Senators who voted to repeal or reduce the estate tax in the past have indicated that they will not support permanent repeal at present. It appears that advocates of repeal do not have the 60 votes needed in the Senate to overcome procedural hurdles and pass the bill.
Although proponents of repeal attempt to portray the estate tax as an assault on family farmers and small business owners, data show that only two percent of families were subject to the tax, and over half of those that paid the tax held estates valued at over $5 million. Not only would the elimination of the estate tax benefit a very small number of wealthy Americans, but as opponents of permanent repeal argue, doing away with the tax would be extremely costly. According to the Center on Budget and Policy Priorities, repeal would cost $55.8 billion in 2012 and $740 billion over the following decade – draining significant resources from the treasury just as the government needs to provide Medicare and Social Security benefits to retiring baby boomers.