Effort to Repeal Estate Tax Fails

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Effort to Repeal Estate Tax Fails

WASHINGTON -- The Republican push for a permanent repeal of the estate tax collapsed in the Democratic-led Senate, but Republicans promised to use their legislative defeat as an issue in the election campaign this fall, The New York Times reported.

"This will be a campaign issue," vowed Senator Phil Gramm, the Texas Republican who sponsored the measure, which fell on a 54-to-44 vote, six votes short of the 60 needed for approval under an agreement for bringing the issue to the floor. Forty-one Democrats, one independent and 2 Republicans opposed letting the bill move forward, while 45 Republicans and 9 Democrats supported repeal.

The bill was heavily supported by the National Association of Convenience Stores (NACS). "Congress did the right thing when it provided American families and small businesses with needed tax relief last year," said Allison Shulman, NACS' director of government affairs. "We are pleased that a majority of the Senate supported permanent elimination of this burdensome and unfair death tax; however, in this case, a majority was not enough."

The vote against repeal came after rejection of two Democratic alternatives, one that would have raised the value of assets exempt from the tax to $3 million next year and a second that Democrats said would have spared virtually all family-owned enterprises from the inheritance tax. The first attracted 38 of the needed 60 votes, the second 44, the report said.

Republicans said those proposals were intended mainly to provide "political cover" for Democrats in re-election fights. The back-and-forth illustrated the election year implications of the measure. Republicans hoped to use it to put some Democrats, especially those who voted for last year's $1.35 trillion cut, on the spot. The tax-cut package gradually elevated the value of assets exempt from the tax until 2010, when it is repealed for one year. It would then be restored to 2001 levels in 2011.

If the Senate fails to act, Gramm said, the tax would "rise out of the grave in 2011 and start destroying family businesses, family farms and family dreams." Democrats said the total repeal, expected to cost $740 billion in the decade after 2010, was too expensive and would favor the very rich, according to the report.

In supporting the Estate Tax, Senator Kent Conrad, the North Dakota Democrat who is the chairman of the Budget Committee, said the Senate had to consider that the federal government had returned to deficit spending since the tax cuts were enacted last year.