Democrats halt move to kill off ‘death tax’

Senate Democrats yesterday filibustered yet another attempt to eliminate the so-called "death tax," which Republicans say unfairly taxes already-taxed money and is crippling family farms and small businesses.

"We charge people income tax when they earn income. With what is left, they make investments, and then as those investments pay dividends or pay income, we tax that. Then we say, 'When you die, we want half of that asset,' " Sen. Johnny Isakson, Georgia Republican, said yesterday.

"It is wrong. It is wrong for individuals, it is wrong for family farmers, it is wrong for landowners, and it is wrong for America."

Republicans fell three votes shy yesterday of the 60 needed to break the filibuster.

In the 57-41 vote, two Republicans -- George V. Voinovich of Ohio and Lincoln Chafee of Rhode Island -- joined Democrats in the filibusters. Four Democrats -- Max Baucus of Montana, Blanche Lincoln of Arkansas, Ben Nelson of Nebraska and Bill Nelson of Florida -- joined Republicans in the effort to break the filibuster.

Current law exempts the first $2 million of an individual's estate and $4 million of a married couple's. Any amount over that is taxed at 46 percent.

The conservative group Free Enterprise Fund quickly issued a press release naming Sen. Mark Pryor, Arkansas Democrat, "Pryor the Liar" for participating in the filibuster. The group attached a policy statement from Mr. Pryor's Web site in which he says, "I support the permanent repeal of an estate tax that harms small businesses and family farms."

Sen. Edward M. Kennedy, Massachusetts Democrat, defended the tax as necessary to keep up with government spending.

"The audacity of the Bush administration and their congressional allies truly knows no limit," he said. "In spite of all of the urgent problems facing our nation -- from the ongoing war in Iraq, to the devastating hurricane damage along the Gulf Coast that has not yet been repaired, to the outrageously high gasoline prices that are squeezing American families -- the top Republican priority is eliminating the estate tax."

Although they were disappointed by yesterday's vote, Senate Republicans immediately turned their efforts to a compromise that would raise the value of property that is taxed at death and lower the tax rate.

"We got very close, but close doesn't count," Sen. Robert F. Bennett, Utah Republican. "So we'll have to see what we can do about perhaps some slight changes or further compromises that can get us to 60 votes."

Minority Leader Harry Reid, Nevada Democrat and director of yesterday's filibuster, indicated that he would be open to a compromise.

"I support fiscally responsible reform of the estate tax," he said. "But anyone who knows the Senate and knows about this compromise proposal will quickly see the majority's proposal does not even pass the laugh test."

As part of President Bush's tax-cutting crusade, Congress instituted a gradual phaseout of the estate tax until it is eliminated in 2010. But if something isn't done before then, Sen. Jon Kyl, Arizona Republican, noted, the tax will return to charging all estates over $1 million at the rate of 55 percent.

"After 2010, the government will confiscate more than half of what you own over $1 million," he said. "Arguing that the death tax only affects the super-rich is a deliberate exaggeration of the truth. Consider the value of your home, your investment retirement plans and all of your assets.

"For entrepreneurs and farmers, consider the value of the property and land you farm on. Is it fair to punish these families and business by taking over half of everything they worked so hard for their entire lives?"

Sen. George Allen, Virginia Republican, said the steep estate tax basically means the government owns all private property and citizens "pay rent" to temporarily hold the deed.