Copyright 2000 Journal Sentinel Inc.
Milwaukee
Journal Sentinel
July 15, 2000 Saturday FINAL EDITION
SECTION: NEWS; Pg. 01A
LENGTH: 788 words
HEADLINE:
Senate votes to abolish inheritance tax;
Repeal has also passed House, but
Clinton vows to veto the bill, calling it 'irresponsible and regressive'
BYLINE: JACKIE KOSZCZUK Knight Ridder News Service
BODY:
Washington -- The Senate
agreed Friday 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 of Representatives in June and now goes to President
Clinton, who said Friday that ending the tax would be "costly, irresponsible and
regressive" and declared that "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 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. Wisconsin Sens. Herb Kohl and Russ
Feingold were among the 35 Democrats who voted against repeal.
Under the
bill, estate tax rates that now range from 18% to 55% would phase out over 10
years, beginning in 2001.
The estate tax bill affects relatively 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 American
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. 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 as much as 80% of the public dislikes the tax.
The
small-business lobby successfully rallied minority business groups to the cause,
including members of the black, Hispanic and American Indian chambers of
commerce. Pressure from those groups prompted several minority House members to
support repeal last month.
Sensing the appeal of the issue in the
upcoming election, Democrats offered an alternative 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.
Senators proposed several other unrelated
provisions providing billions of dollars in tax breaks, including repealing the
3% telephone tax. But the amendments were all stripped away on
a 53-45 vote after GOP leaders persuaded their colleagues to send Clinton a
clean bill that he would have to veto on the merits.
Sen. Don Nickles
(R-Okla.), the GOP assistant majority leader, said he doubted repeal would make
it into law this year. "It probably will become law a year from now when
President Bush signs it," he said.
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The Associated
Press contributed to this report.
LOAD-DATE: July 15,
2000 
