The House has approved a measure to permanently repeal the estate tax, but once again the legislation faces an uphill battle in the Senate.
In June 2002-the last time the Senate voted on a permanent repeal of what's often called the ``death tax''-the vote was 54-44, six votes short of the three-fifths majority needed for passage. Though Republicans now have a bigger majority in the Senate-55 instead of 51-there is still some trepidation among the repeal's supporters that the votes for passage still aren't there.
Becky MacDicken, government affairs director for the Tire Industry Association (TIA), said the Senate will take up the bill in late July.
Sen. Jon Kyl, R-Ariz., is working to line up the 60 votes needed for passage, according to Ms. MacDicken. ``If he doesn't, the Senate will then work on a compromise to obtain permanent reform instead of permanent repeal. Obviously, TIA would prefer permanent repeal.''
Currently, the federal government is phasing in a full repeal of the estate tax through 2010, which then lapses back in 2011 to taxation of all inherited assets of more than $1 million.
TIA and many other small business groups-such as the National Federation of Independent Business and the Automotive Service Association-have long sought the total repeal of the estate tax. Only that, they claim, will spare small business owners from the danger of having to sell their inherited assets, simply to pay the tax.
However, other groups-such as the National Farmers Union, which represents family farmers and ranchers-fear a permanent repeal may end up costing farmers and small business owners more than it's worth.
``The tremendous cost of repeal will come back to us and have to be paid for,'' said Tom Buis, vice president of legislative affairs for the union. ``We have the largest budget deficit in our history, and it really hurts farmers and small business when money becomes scarce.''
Also, according to Mr. Buis, a repeal of the estate tax would result in millions of people-who never had to do so before-paying capital gains taxes on the sale of inherited assets.
Instead of an outright repeal, Mr. Buis said, the National Farmers Union favors an increase in the exemption to $4 million (or $8 million per couple) indexed for inflation.