New estate-tax votes seen as unlikely
Posted on Friday, September 8, 2006
URL: http://www.nwanews.com/adg/News/165913/
WASHINGTON — Those eager for Congress to further overhaul estate taxes will probably not get their wish this year, Arkansas’ two senators and other observers said Thursday.
Democratic Sen. Blanche Lincoln, a member of the Senate Finance Committee, said she sees action on the estate tax before the November elections as doubtful and at best would give it “a 50-50 shot” in a lame-duck session expected later this year.
“I don’t know if there is going to be enough time now,” she said.
Sen. Mark Pryor, also a Democrat, was even more downbeat.
Pryor, who has proposed a compromise that would fall short of eliminating the tax, said he expects Congress to deal with it in the first quarter of 2007.
“I would like to get it done, but I don’t know if we have time to work through all the issues,” he said.
Estate-tax changes failed to pass shortly before the August recess. Then, they were tied to changes in the minimum wage and the extension of other tax breaks. It was called a “trifecta” bill.
But that measure stalled in the Senate, which is considered a far bigger hurdle than the House.
Whether to eliminate or slash estate taxes has been a simmering issue on Capitol Hill for at least a decade.
Small-business owners and farmers contend that estate taxes imperil their ability to pass their operations on to their children.
Estate-tax changes have been a rallying cry for the conservative anti-tax movement in general.
But liberal groups have said the nation can ill afford estatetax changes in a time of large deficits. They also defend the estate tax as one of the more progressive links in the nation’s tax system.
Congress temporarily reduced estate taxes as part of the 2001 tax-cut bill, but those reductions are set to expire at the end of the decade, leaving many to complain that uncertainty hangs over their estate planning.
The cost of eliminating estate taxes ranges from $ 400 billion to $ 1 trillion over 10 years. The smaller estimates come from congressional sources, the larger ones from liberal advocacy groups such as OMB Watch.
Pryor has been working on a compromise that, instead of eliminating the tax, would increase the exemption from $ 2 million to $ 5 million, an amount he says would give farmers and small businesses the protection they need.
Pryor’s bill, which would also apply a 35 percent tax rate to estates above $ 5 million, would cost $ 236 billion, according to congressional estimates.
But even conservative Congress watchers such as Brian Darling of the Heritage Foundation see scant chance of action this year.
“You won’t see much happen in a lame-duck session,” he said. “They are going to have so much else on their priority list, funding the government, than to deal with a controversial tax-cut package.”
That might change, he said, “if it is perceived as an issue that moved the electorate one way or another [on Nov. 7 ].”
Adam Hughes, fiscal analyst at OMB Watch, said action is looking “less and less likely.”
But Hughes said bills such as Pryor’s are far more palatable to his organization than repeal.
Senate Majority Leader Bill Frist reiterated earlier this week that he would still like to see action on the estate tax this month and left open the possibility of bringing back the trifecta bill.
Lincoln said that would be a nonstarter. She said she knows of many Republicans, as well as Democrats, who resent attempts to link the minimum wage and estate-tax issues.
“If he does that, I think it is going to meet the same result,” Lincoln said, although she was one of those who voted for the trifecta bill.
Lack of action will mean continued uncertainty for estate planners, and Lincoln said that disappoints her greatly.
“They need to know what’s going to happen beyond the expiration of this,” she said.