Vote on estate tax divides delegation
Posted on Sunday, June 11, 2006
URL: http://www.nwanews.com/adg/News/157294/
WASHINGTON — Senate Majority Leader Bill Frist summoned seven other senators to his Capitol Hill office Thursday to examine whether an effort to repeal the federal estate tax still had a pulse.
A few hours earlier, a “motion to proceed” on a bill to eliminate the “death tax” died in the Senate, largely from Democratic opposition.
Arkansas’ senators, who split on the vote, joined the huddle in Frist’s office. Sen. Blanche Lincoln was one of four Democrats who voted to go forward with debate on the bill. Sen. Mark Pryor, also a Democrat, voted for a halt on the measure, which needed 60 votes to clear a procedural hurdle. The vote was 57-41.
The estate tax is in the throes of a gradual phaseout, effected by a 2001 law. Currently, estates valued at up to $ 2 million are exempt from the tax, which is a levy on a person’s assets when he dies. The top tax rate is 46 percent. In 2009, the exemption ceiling rises to $ 3. 5 million with a top tax rate of 45 percent. In 2010, the tax goes away, only to return the following year at a maximum rate of 55 percent with a $ 1 million exemption.
Since passage of the 2001 law, those who favor permanent elimination have characterized the estate tax as a burden on small-business owners and farmers, who, these tax foes say, are forced to sell off assets to pay for it. Those who support the tax’s return in 2011 say only the ultrawealthy stand to gain from its repeal — a move, they say, that will squeeze an already tight federal budget.
Lincoln says that, although she favors doing away with the estate tax, budget pressures necessitate a compromise.
“I have supported full repeal in the past and, in principle, I still do,” she said. “We are in some difficult budgetary times.”
On his Web site, Pryor frames his position this way: “I support the permanent repeal of an estate tax that harms small businesses and family farms.”
Pryor said he voted against Thursday’s “motion to proceed” for lack of a firm agreement on a compromise measure.
“I’ve never really been for a total repeal on everything,” Pryor said, stressing that he supports eliminating a tax only on small businesses and farms.
Sitting in Frist’s office, Pryor said: “I could never get any assurances we’d have a chance to vote on a compromise. The measuring sticks kept moving.”
Several options were on the table, including plans to raise the exemption ceiling or to impose a tiered tax, at lower rates. Before the meeting, Frist said on the Senate floor that, if repeal failed, “I would think we would need to gather together to have compromise legislation, and I would expect a vote on that as well.”
Pryor’s vote disappointed estate-tax opponents. “There were some people who had expressed a desire to repeal the tax but, when push came to shove and they had to vote on it, we saw their true colors,” said Martin Regalia, vice president of tax and economic policy at the U. S. Chamber of Commerce in Washington.
Phil Kerpen, policy director of Free Enterprise, a Washington group that lobbied to kill the tax, was more blunt.
“I feel that he lied,” Kerpen said, referring to Pryor. “He’s in a difficult position, as all moderates are. In my view, he lied to Arkansans and to the American people.”
The Library of Congress Congressional Research Service shows the estate tax applied to, at most, 4 percent of all family businesses and farms in 2003.
“The number of farms paying the estate tax is pretty small,” acknowledged Bill Beach, director of the Center for Data Analysis at the Heritage Foundation, a conservative Washington research and advocacy group.
But, Beach added, that’s because many farmers liquidate assets, or spend money on accountants and attorneys before they die, so their heirs won’t be faced with paying the tax.
“That’s an economic waste,” Beach said.
But even without an estate tax, farmers and small business owners would still pay attorneys and accountants to plan for the transfer of their estates, countered Taylor Lincoln, research director at Congress Watch, a Washington consumer lobbying group. Congressional time that could have been spent on issues such as health care and rebuilding New Orleans has been wasted on the estate tax, he said.
“The Senate has more important things to take on than whether people’s accounting bills are too high when they pass on their estates.”
Both Blanche Lincoln and Pryor believe the issue will surface again this year. Meantime, their Senate colleagues have dug in, on both sides of the aisle.
“I would have been prepared to make some concessions to have a bipartisan solution,” Sen. Trent Lott, a Mississippi Republican, said. “Things have changed. My position has hardened.
“ Now we should write it more to our liking,” he said, and include the proposal as an amendment to another bill.
Democrats argued that measures short of full repeal, such as the compromise offered by Arizona Republican Sen. Jon Kyl to raise the size of an estate that is exempt from a tax and lower the tax rate, would still be too costly.
“The Kyl amendment is no compromise,” Sen. Kent Conrad, a North Dakota Democrat, said at a midweek news conference. “It is a capitulation.”
Using numbers tabulated by Congress’ Joint Committee on Taxation, Conrad said repealing the tax would lighten federal coffers by $ 776 billion between 2012 and 2021.
Connecticut’s Sen. Joe Lieberman, also a Democrat, offered a similar view.
“The adoption of any other compromise, like the Kyl compromise, would be profoundly unfair and grotesquely irresponsible,” he said.
The possibility of Democrats gaining control of either the House or Senate in 2007 as a result of November’s midterm elections, has made the issue more pressing for advocates of abolishing the tax.
“Hopefully we’ll get another bite at the apple,” said Macey Davis, tax counsel at the National Federation of Independent Business, which lists repeal of the estate tax as its top priority. “I’m sure a shift in the majority would make it more difficult.”