Repeal of “Death Tax” a possibility
The House has passed legislation that, beginning in 2010, would permanently repeal the estate tax, and with a Republican majority in the Senate, some party members say it has a good chance to also pass there as well.
The vote was 272-162, with 42 Democrats voting in support. The only Republican to vote against the bill was Rep. Jim Leach of Iowa.
“The death tax is wrong,” said Rep. E. Clay Shaw Jr., Florida Republican. “To go in and tax almost half of someone’s estate because they’ve accumulated a lot, and to make death an instrument of taxation, is wrong.”
Regarding the bill, Republicans argued that the tax levied on estates following the death of the owner hurts small businesses and family farms, while the majority of Democrats have complained that the bill only helps the rich, saying that the money should instead be used for other purposes, such as stabilizing the Social Security system.
“This is about helping the wealthiest of the wealthy,” said Rep. Jim McGovern, Massachusetts Democrat. He said the repeal-only helped three-tenths of the wealthiest 1 percent of the country who pays the estate tax.
In the past, the House has approved legislation to permanently repeal the estate tax, but such legislation died in the Senate. However, because last year’s election increased the Republican majority in the Senate, there are some who are saying that it now may get through.
Arizona Republican Sen. Jon Kyl has a companion bill in the Senate. “I think we have a better chance now,” Mr. Kyl said.
A spokesman for Senate Majority Leader Bill Frist, a Republican from Tennessee, didn’t know a time frame for a Senate vote but said Mr. Frist supports a full repeal of the death tax.
Under tax relief passed by Congress in 2001, the estate tax is to be gradually phased out between now and 2010. This is accomplished by increasing the amounts exempt from the tax, $1.5 million for individuals to $3 million for couples, while at the same time reducing the top rate imposed by the tax, which is 47 percent.
But the 2001 law allows the estate tax to return in 2011. The bill passed by the House prevents that from happening by getting rid of it permanently.
Rep. Earl Pomeroy, Democrat from North Dakota, proposed an alternative that would not have eliminated the estate tax, but it would have exempted more people from paying it. His proposal would have raised the amount exempted from the estate tax next year to $3 million for individuals and $6 million per couple and then in 2009 bumped it up to $3.5 million for individuals and $7 million for couples
Congressman Pomeroy’s bill was estimated to cost $72 billion over 10 years and the Republican bill is estimated to cost $290 billion over 10 years. His proposal was defeated, 238-194.
Congressman McGovern said Congress should accept Mr. Pomeroy’s bill and then take the cost difference between those two proposals, amounting to about $218 billion, and put it back into the Social Security Trust Fund. He argued that Republicans who insist there is a Social Security crisis should be eager to solve it quickly and easily.
“If they truly believe there is a crisis, they should step up to the plate,” he said.
House Minority Leader Nancy Pelosi said the House-passed Republican bill uses funds those working Americans are paying into Social Security.
“What Republicans are doing today is putting their hand into that pot and saying, ‘We’re taking that money and we’re subsidizing the truly wealthy,’ ” she said.
But Rep. Lynn Westmoreland, Republican from Georgia, saw it differently.
” Cutting taxes does not cost the government money,” he said. “It allows people who earn that money to keep more of it.”
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- Repeal of “Death Tax” a possibility