CHN: Republicans Fall Short on Estate Tax
Permanent Repeal Fails in the Senate
On June 12, Republicans in the Senate garnered only 54 of the 60 votes needed to pass legislation – introduced by Senator Phil Gramm (R-TX) – to make permanent a repeal of the estate tax. A phase-out of the estate tax was included in the $1.35 trillion tax cut enacted by President Bush last year. Currently, the phase-out is set to sunset in 2010. Nine Democrats voted for repeal, including three seeking re-election this November – Max Baucus (D-MT), Max Cleland (D-GA), and Mary Landrieu (D-LA). Two Republicans – John McCain (AR) and Lincoln Chafee (R-RI) – aligned themselves with the majority of Democrats who voted against permanent repeal.
Two Democratic amendments were offered, but both failed to pass. Senator Kent Conrad (D-ND) offered an amendment that would have exempted the first $3 million of an individual’s assets ($6 million for a married couple) from the tax. The current exemption is $1 million for an individual and $2 million for a couple. It would also have fixed the top estate tax rate at fifty percent. The amendment failed by a 38-60 vote. Senator Byron Dorgan (D-ND) offered a similar amendment, increasing the credit to $4 million for an individual and $8 million for a married couple. Dorgan’s amendment also would have expanded the tax breaks for family farms and businesses. It failed by a 44-54 vote. These votes indicate that a significant number of Senators are in favor of reform.
The defeat of the Gramm amendment represents a victory against the permanent repeal of the estate tax. Although supporters of repeal portray the estate tax debate as a fight to preserve small family farms and family-owned businesses, only two percent of estates are actually subject to the tax, a number that would be greatly reduced with the passage of a reform package. While the June 12 vote was a victory for advocates of a fair estate tax, it is possible that Gramm will try to attach the language to other legislation moving through the Senate this year. The House passed legislation (HR 1836) to permanently repeal the estate tax on June 6, by a 256-171 vote.