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Copyright 2000 Phoenix Newspapers, Inc.  
THE ARIZONA REPUBLIC

June 10, 2000 Saturday, Final Chaser

SECTION: FRONT; Pg. A1

LENGTH: 381 words

HEADLINE: HOUSE SUPPORTS PHASEOUT OF ESTATE TAX OVER 10 YEARS

BYLINE: Republic news services

DATELINE: WASHINGTON

BODY:
The House voted overwhelmingly Friday to phase out the federal tax levied on estates after a person dies, with 65 Democrats crossing party lines to vote for one of the GOP's top legislative priorities.

The lopsided vote for the tax cut was 279-136. Arizona Republicans J.D. Hayworth, Jim Kolbe, Matt Salmon, John Shadegg and Bob Stump voted for the measure. Democrat Ed Pastor voted against it.

Last-minute maneuvering by Democratic leaders hoping to ward off the defections underscored the sudden potency of the issue, giving hope to some lawmakers and lobbyists that a deal may be possible before the session ends. President Clinton promised a veto of the GOP bill on the grounds it is fiscally irresponsible. But, in a letter to House Speaker Dennis Hastert, R-Ill., Clinton said he was committed to compromise.

The GOP-crafted bill would gradually repeal the estate tax over the next decade, mostly by cutting rates. Already, 98 percent of decedents avoid any taxes altogether because the first $675,000 of an estate is exempt from taxation. Only 47,500 estates paid any estate tax in 1998, the most recent year figures are available; but about half of the money raised by estate taxes was paid by the fewer than 3,000 estates worth more than $5 million.

The bill's slow phase-in helps keeps its cost relatively low -- $105 billion over 10 years. When fully implemented, federal tax revenues would decline an estimated $50 billion a year, leading Clinton to decry it as giving "the largest estates a windfall."

But small business and farm groups have pushed hard for an estate tax repeal, claiming the tax burden at death all too often forces heirs to sell businesses and farms. That pitch helped gather support from even some of the chamber's most liberal members, and Democrats scrambled to come up with an alternative that fell short of a full repeal but still would have almost halved the number of estates subject to the tax.

The Senate now must act on the measure, and so far this year, it has proved to be the graveyard for a series of tax cuts approved by the House. But the House vote gave the issue new momentum.

A Democratic alternative to raise the exemption level for the tax to $1.1 million next year and cut rates by 20 percent was rejected, 222-196.



LOAD-DATE: June 11, 2000




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