WASHINGTON (June 13, 2000)—By a sweeping margin, the House of Representatives has passed a bill to repeal the estate tax over the next 10 years.
The veto-proof, 279-136 voting margin on June 9 delighted tire dealers, retreaders and other supporters of the bill, although some supporters said they were disappointed they couldn´t obtain immediate repeal. Meanwhile, Democrats who oppose the measure said they need to swing only 10 votes to sustain the certain veto of President Clinton.
As passed by the House, the bill would repeal the top estate tax rate of 55 percent and a 5-percent surtax on estates in 2001. Rates over 50 percent would be axed in 2002, and would inch downward by 1, 1.5 or 2 percent annually until outright repeal in 2010.
Currently, farms and small businesses valued at more than $1.3 million are subject to the tax. Small business representatives have lobbied for years to get rid of the tax, arguing that all too often the heirs to family businesses have to sell their assets simply to pay their tax bills.
Opponents of repeal, however, claim that only the top 2 percent of heirs have to pay the tax, and that the cost of repeal—$105 billion over 10 years, plus $50 billion a year thereafter—is too heavy a hit for the federal budget.
Supporters of the estate tax have offered an alternative package, which would reduce the top tax rate to 44 percent and increase the farm and small business exemption to $2 million. This package has been a tough sell, however, as 65 Democrats broke ranks to vote for repeal on the House floor.
While both the Tire Association of North America and the International Tire and Rubber Association support the current bill, they hoped for something quicker.
"We´re disappointed because we want it all," said Roy E. Littlefield III, government relations director for the ITRA. "Clearly it´s an unfair tax, and with business evaluations going up over the years, the limits don´t help."
The crucial thing now is what the Senate decides to do with the estate tax, according to Rebecca MacDicken, TANA government affairs director.
"We´re getting feedback that a lot of senators don´t want to repeal the tax outright," Ms. MacDicken said. "They would rather just raise the limits. We want to change their minds, because if the tax is repealed small businessmen can take the money they´re spending on estate planning and roll that into the business to create new jobs."
The Senate leadership wants to act on at least some tax bills this summer, she said. But the priority of Senate Majority Leader Trent Lott, R-Miss., is repeal of the marriage penalty tax.