Copyright 2000 The Buffalo News
The Buffalo News
July 14, 2000, Friday, FINAL EDITION
SECTION: NEWS, Pg. 1A
LENGTH: 872 words
HEADLINE:
SENATE VOTE OKS BILL TO ELIMINATE ESTATE TAXES
BYLINE:
CURT ANDERSON; Associated Press
DATELINE: WASHINGTON
BODY:
The Senate sent President Clinton a
Republican bill today that would eliminate estate taxes over the next decade in
defiance of a veto threat and Democratic criticism that it is tilted toward the
rich.
Nine Democrats joined most Republicans in the 59-39 vote to pass
the bill, which would completely eliminate the estate tax by 2010 at a cost of
about $ 105 billion in government revenue. The vote was well short of the
two-thirds necessary to override a veto.
Senators had attached
amendments providing billions of dollars in other tax breaks, including repeal
of the 102-year-old telephone tax, but those were all deleted on a 53-45 vote.
GOP leaders said they wanted to force Clinton to make a clear decision on an
estate tax repeal bill free of other complications.
New
York's two Democratic senators -- Daniel Patrick Moynihan and Charles E. Schumer
-- voted against the measure.
The Senate then immediately began debating
the next big Republican tax cut: a 10-year, $ 248 billion measure slashing
income taxes for millions of married couples, including 25 million who pay more
than they would if single. Votes are expected next week on that bill.
Earlier, the Senate balked at adding another popular provision to the
bill. An amendment by Sen. Spencer Abraham, R-Mich., to suspend the
18.3-cent-a-gallon federal gasoline tax until after the November elections was
defeated, 59-40. Abraham said the temporary tax reduction was needed to lower
high fuel prices. Opponents said it would jeopardize money for road building and
other transportation projects.
Republican supporters said the
estate tax, which reaches a top rate of 55 percent,
hinders investment
and job creation, forces millions of people to do costly estate planning and
particularly hurts farmers and small businesses.
"No family, no farm and
no business should have to worry about this sort of thing," said Sen. William
Roth, R-Del.
The bill, which passed the House in June, would cut the top
55 percent estate tax rate in 2001 and then gradually phase out all other rates,
with full repeal coming in 2010. The cost was estimated at $ 105 billion during
the phaseout, ballooning to $ 750 billion in the decade after repeal would be in
effect fully.
Republicans said the government's revenue loss would be
cushioned somewhat because the bill changes the way assets are valued -- known
as basis -- so that an heir would owe higher capital-gains taxes than under
current law once an inherited asset is sold. Capital-gains tax rates, however,
are much lower than estate tax rates.
"It removes death as the trigger
for any tax," Sen. Jon Kyl, R-Ariz., said of the repeal bill.
Democrats
said the big cost of repeal and the fact that heirs of only 2 percent of people
who die pay estate taxes was evidence that Republicans wanted mainly to help the
rich. In 1997, for example, only 43,000 estates out of 2.7 million adult deaths
were subject to the estate tax.
"You can't disguise what you're doing
here in terms of a large tax cut for the wealthiest people in the United
States," said Sen. Byron Dorgan, D-N.D.
But the Senate voted, 53-46,
against a Democratic substitute costing $ 64 billion over 10 years that would
have sharply raised estate tax exemptions -now $ 675,000 per individual --
particularly for the farmers and small businesses that are hurt the most.
Senate Minority Leader Tom Daschle, D-S.D., said Clinton would certainly
veto the bill and that Democrats would be able to sustain it. "This isn't going
anyplace," he said.
Both sides used the debate to highlight some of
their other tax cut priorities. In some cases, the votes were intended mainly
for political consumption by senators up for re-election this year.
In
votes Thursday, the Senate:
Approved, 97-3, an amendment by Roth to
repeal on Sept. 1 the 3 percent excise tax on telephone service that dates from
the Spanish-American War. A House-passed version would phase out repeal over
three years.
Approved, 58-41, an amendment by Sen. Rod Grams, R-Minn.,
that would repeal a 1993 law imposing income taxes on 85 percent, instead of 50
percent, of Social Security benefits for people with earnings over $ 34,000 for
a single taxpayer, $ 44,000 for a married couple.
Approved on a voice
vote an amendment by Sen. Charles Grassley, R-Iowa, giving several tax breaks to
farmers, including creation of tax-deferred accounts in which they could deposit
up to 20 percent of their earnings. The measure also would repeal a law passed
last year forcing small businesses to pay income taxes on certain sales
immediately, even if the buyers were paying in installments.
Voted 98-1
to make the business research and development tax credit permanent. It was
extended last year for five years.
Abolition of the estate tax is a top
priority for Republicans and several powerful lobbying groups, including the
National Federation of Independent Business, the National Association of
Manufacturers and the American Farm Bureau.
It is supported by Texas
Gov. George W. Bush, the presumptive GOP presidential nominee, and is certain to
be an issue in the fall presidential and congressional campaigns if Clinton
follows through on his veto threat.
LOAD-DATE: July 17,
2000 
