GOP Push to Kill the Estate Tax May Have Enough Votes for Success in the Senate
Apr 13, 2005
By Mary Dalrymple
The Associated Press
WASHINGTON (AP) - House Republicans call it the "death tax," but their effort to repeal permanently the estate tax has itself succumbed three different times upon reaching the Senate. This year, though, four additional GOP votes may give the measure the boost it needs to enter the tax code.
"Death should not be a taxable event," said Rep. Kenny Hulshof of Missouri, who sponsored the Republican bill, scheduled for debate Wednesday. "The death tax has a very real, negative impact on our economy."
Promising faster tax relief with less damage to the federal budget, Democrats countered with a proposal to leave the tax in place for the largest estates but immediately increase the number exempt from the tax.
"It is certain. It is immediate," said Rep. Earl Pomeroy, the North Dakota Democrat who drafted his party's alternative. "It is a significant break from where we are now."
Republicans have pressed to banish permanently the estate tax since passing President Bush's first tax cut and repealing the levy for one year - in 2010.
That tax cut set the estate tax on a decreasing path ending with repeal at the end of the decade. Until then, the size of an estate exempt from the tax gradually increases and the top rate on taxable estates gradually falls.
This year, estates worth up to $1.5 million for an individual or worth $3 million for a couple owe no tax. The top tax rate stands at 47 percent. Just before its complete repeal, in 2009, the exemption increases to $3.5 million for an individual or $7 million for a couple. The tax rate falls to 45 percent.
In 2004, the government collected $24.8 billion from the estate tax, according to the nonpartisan Congressional Research Service. The number of estates that owed tax in 2003 amounted to 1.25 percent of deaths the previous year.
Supporters of the tax's elimination argue that any level of tax discriminates against some at the expense of others.
"Someone will fall below it. Someone will be above it," Hulshof said of arbitrary markers exempting some estates from taxation.
Many Democrats argue that the country cannot afford the roughly $290 billion it would cost over a decade to eliminate the tax while budget deficits mount and expenditures for homeland security and war increase.
The Democratic plan would increase the size of an estate exempt from tax to $3 million for an individual and $6 million for a couple beginning next year. It would reduce government revenue $70 billion.
Pomeroy said the change would eliminate 99.7 percent of estates from taxation.
Democrats have also argued that many people would be worse off when the tax is eliminated because many who now escape estate taxation would owe capital gains taxes on their inherited estates.
A study by a senior aide to Democrats on the House Ways and Means Committee concluded that there would be more losers than winners if the estate tax is repealed. If the estate tax were repealed in 2009, the study estimated more than 71,000 estates could face new capital gains taxes. Under the estate tax laws scheduled to be in place that year, about 15,000 would owe estate tax.
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On the Web:
To view H.R. 8: loc.thomas.gov
AP-ES-04-13-05 0231EDT
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