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Senate Rejects Effort to Cut Estate Tax

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  • Ram Lau
    Even now and then, more like once a yaer, Voinovich lets his conscience speak. Remember he wept on the Senate floor begging his colleagues to vote against the
    Message 1 of 1 , Jun 8, 2006
      Even now and then, more like once a yaer, Voinovich lets his
      conscience speak. Remember he wept on the Senate floor begging his
      colleagues to vote against the John Bolton nomination to the UN last
      year? He is a respectable character.


      Senate Rejects Effort to Cut Estate Tax

      Filed at 12:14 p.m. ET

      WASHINGTON (AP) -- Senators voted Thursday to reject a Republican
      effort to abolish taxes on inherited estates during an election year
      with control of Congress at stake.

      GOP leaders had pushed senators to permanently eliminate the estate
      tax, which disappears in 2010 under President Bush's first tax cut,
      but rears up again a year later.

      A 57-41 vote fell three votes short of advancing the bill. Senate
      Majority Leader Bill Frist, R-Tenn., said the Senate will vote again
      this year on a tax that opponents call the ''death tax.''

      ''Getting rid of the death tax is just too important an issue to give
      up so easily,'' he said.

      A small group of senators, knowing Republicans lacked the votes to
      eliminate the tax, had hoped to keep the issue alive with an agreement
      to remove the tax from smaller estates and lessen the hit on larger ones.

      Frist had given the negotiators a lift by agreeing to give such a
      compromise a vote. That didn't give the tax's strongest critics enough
      support to maneuver the issue around Democratic opponents, however.

      ''The estate tax is an extremely costly tax for a wealthy few that
      comes at the expense of every other American born and yet to be born
      for decades to come,'' said Senate Minority Leader Harry Reid, D-Nev.

      Sen. Max Baucus, a Democrat who favors repealing the tax, had warned
      that negotiators working on a compromise needed more time. He said he
      hoped the vote would drive senators back to those talks.

      Under current law this year, the first $2 million of a person's estate
      or $4 million of a couple's, escapes taxation. The remainder can be
      taxed at rates up to 46 percent.

      According to the most recent statistics available from the Internal
      Revenue Service, 1.17 percent of people who died in 2002 left a
      taxable estate.

      Sen. Jon Kyl, R-Ariz., had been brokering a compromise among
      Republicans and Democrats interested in paring down the tax and
      rewriting the quirky law that kills and resurrects the tax.

      He proposed exempting the first $5 million of an individual's estate,
      or $10 million of a couple's, from taxation. The size of estates
      escaping the tax would increase each year to keep pace with inflation.

      Estates between $5 million and $30 million would be taxed at rates
      equal to capital gains, and the remainder would be taxed at 30 percent.

      ''That is a fair way to help the people at the lower end of the
      spectrum and yet collect the revenue from those very, very wealthy
      estates that we all agree can pay part of this estate tax,'' Kyl said.

      That effort attracted some of the senators who had been wary of
      repealing the tax but agreeable to shrinking its impact on heirs, but
      it did not attract enough Democrats who had expressed interest in
      negotiating a deal.

      Two Republicans, Sen. Lincoln Chafee of Rhode Island and Sen. George
      Voinovich of Ohio, broke with their party.

      ''Repealing the estate tax during this time of fiscal crisis would be
      incredibly irresponsible and intellectually dishonest,'' Voinovich said.
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