House passes legislation to end ‘death tax’

The House passed legislation yesterday that, beginning in 2010, would permanently repeal the estate tax, and with recent Republican gains in the Senate, some party members say it has a good chance to also pass that chamber.

The vote was 272-162, with 42 Democrats joining in support. Rep. Jim Leach of Iowa was the only Republican to vote no.

“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.”

Republicans argued that the tax levied on estates after an owner dies particularly hurts small businesses and family farms, while most Democrats complained the bill would only help the rich. That money, they say, should instead be used for other purposes, such as helping stabilize the Social Security system.

“This is about helping the wealthiest of the wealthy,” said Rep. Jim McGovern, Massachusetts Democrat. He said the repeal would only help three-tenths of the wealthiest 1 percent of the country who pay the estate tax.

The House has approved legislation to permanently repeal the estate tax in the past, which died in the Senate, but because last year’s election increased the Republican majority in the Senate, some say it now may get through.

Sen. Jon Kyl, Arizona Republican, 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, Tennessee Republican, 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 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 simultaneously reducing the top rate imposed by the tax, which is 47 percent.

But the 2001 law allows the estate tax to come back in 2011. The bill passed by the House would prevent that from happening by getting rid of it permanently.

Rep. Earl Pomeroy, North Dakota Democrat, offered an alternative, defeated 238-194, that would not have eliminated the estate tax, rather 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.

Mr. 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.

Mr. McGovern said Congress should accept Mr. Pomeroy’s bill and then take the cost difference between those two proposals — 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.

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