LEXIS-NEXIS® Academic Universe

Search Terms: estate tax repeal

Document 121 of 187.

July 15, 2000, Saturday

SECTION: NEWS;Pg. A-1

LENGTH: 929 words

HEADLINE: Senate OKs inheritance tax repeal; veto vowed; May become potent issue in fall elections

BYLINE: Jackie Koszczuk; KNIGHT RIDDER NEWS SERVICE

BODY:
WASHINGTON -- The Senate agreed yesterday to abolish the federal inheritance tax, which affects only a fraction of the nation's richest families but has drawn the wrath of millions of middle-income Americans who hope to be well off themselves someday.

The repeal passed the House in June and now goes to President Clinton, who said yesterday that ending the tax would be "costly, irresponsible and regressive" and declared, "When this bill comes to my desk, I will veto it."

Republicans in Congress say they don't have the votes to override a veto, but some form of the repeal, perhaps targeting family-owned farms and small businesses, could survive as part of a budget compromise in the fall.

If not, Republican lawmakers predict that repeal of the tax would be a potent issue in the fall elections, when they will be fighting to retain their majorities in both houses of Congress.

In Senate debate, Republicans saw the issue as defending the American dream of building wealth and passing it on to children. Democrats saw it as a break for the super-rich.

"Does anyone really believe that Donald Trump, Bill Gates or Steve Forbes needs a tax cut?" asked Sen. John Kerry, D-Mass.

The Senate vote was 59-39 to abolish the 84-year-old tax on cash, property, stocks, bonds and other assets passed from one generation of Americans to the next.

Under the measure, estate tax rates that now range from 18 percent to 55 percent would be phased out over 10 years, beginning in 2001.

The estate tax bill affects few taxpayers. Only about 47,000 estates each year are large enough to be taxed; those worth less than $675,000 for an individual and $1.35 million for a couple are exempt.

But those who do pay are a politically powerful constituency.

They include family farmers and owners of small businesses who complain that they often have to sell assets to keep from losing their businesses to the tax when they attempt to pass them to sons and daughters.

"No family, no farm and no business should have to worry about this sort of thing," said Sen. William Roth, R-Del., chairman of the Senate Finance Committee.

The Senate debate revealed how much U.S. thought about taxing estates has changed since the levy was enacted in 1916, during the Woodrow Wilson administration.

It was created with the purpose of preventing the richest families from consolidating wealth in a few hands.

From both parties

But in this week's debate, senators from both parties decried the idea of the government siphoning off the hard-earned gains of parents as they try to pass the fruits of their success to their children.

"Too often in America, children have to sell the farm or sell the business to give the government up to 55 cents out of every dollar they earn," said Sen. Phil Gramm, R-Texas. "Republicans believe that is unfair, that is un-American and that is immoral."

Repeal also has caught the fancy of people who aren't rich enough to pay the tax but who aspire to greater wealth in the booming U.S. economy.

"Perhaps counter-intuitively, repealing the estate tax is one of the more populist tax cuts considered by Congress this session," Senate GOP leaders wrote in a memo urging support for the bill.

They noted that public opinion surveys show that as much as 80 percent of the public dislikes the tax.

Rep. John Boehner, R-Ohio, said, "People, regardless of whether they are affected themselves, think the estate tax is unfair."

The small-business lobby rallied minority business groups to the cause, including members of the black, Hispanic and Native American chambers of commerce. Pressure from those groups prompted several minority House members to support repeal last month.

"We have a number of African-American store owners who are in the first generation of wealth," said Bill Greer, spokesman for the Food Marketing Institute, which represents many family-owned supermarkets. "They are finally acquiring some assets, and suddenly they're staring at the death tax."

Significant cost

Typical is Johnny F. Johnson, a member of the trade group and an African-American grocer in Richmond, Va., whose stores employ more than 1,000 people. "I am spending a small fortune in legal fees to preserve and protect my business from the estate tax," Johnson said.

Despite the relatively small number of taxpayers affected by the tax, the cost of repeal would be significant because estates that do pay, pay a lot.

Estates valued at $5 million or more account for about half the $20 billion collected in estate taxes each year. Repeal would cost the government $105 billion during the phase-out period, and $750 billion in the decade after that.

Sensing the appeal of the issue in the upcoming election, Democrats offered a bill that would reduce the tax but not abolish it.

Their bill would have raised the threshold from $1.35 million for a couple to $4 million for a couple before the tax kicked in. Family-owned businesses valued at less than $8 million for a couple also would have been exempt.

The Democratic bill would have cost $64 billion over 10 years. It was defeated 53-46.

Nine Democrats broke ranks to support the estate tax repeal: Robert Torricelli, New Jersey; Dianne Feinstein, California; Max Cleland, Georgia; Patty Murray, Washington; John Breaux and Mary Landrieu, both of Louisiana; Ron Wyden, Oregon; Blanche Lincoln, Arkansas; and Charles Robb, Virginia.

Three Republicans opposed the repeal: Arlen Specter, Pennsylvania; James Jeffords, Vermont; and George Voinovich, Ohio.

LOAD-DATE: July 19, 2000

Document 121 of 187.


Search Terms: estate tax repeal
To narrow your search, please enter a word or phrase: