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Senators Fail to Open Debate on Estate Tax Repeal
The Senate on June 8 fell three votes shy of the 60 needed to consider and vote on legislation that would permanently repeal the estate tax.
While this represents a significant setback for proponents seeking to overturn what they call the “death tax,” Senate Majority Leader Bill Frist (R-Tenn.) has pledged to resurrect the issue later this year.
Before consideration of H.R. 8, the “Death Tax Repeal Permanency Act of 2005,” could even begin, legislators had to clear a parliamentary maneuver by invoking cloture, which requires the support of 60 senators for opening debate.
Because of the importance of this issue to home builders, NAHB designated the cloture vote on H.R. 8 as a “key vote” and sent a letter to every senator urging them to support the motion and to allow a debate on scuttling the estate tax to take place, regardless of their position on the issue.
In the end, the Senate voted 57-41 in favor of the motion to limit debate. (See how your Senator voted).
The legislation, which was approved by the House last April on a 272-162 vote, would make permanent the 2010 repeal of the estate tax put in place by the “Economic Growth and Tax Relief Reconciliation Act of 2001” (EGTRRA), the first of the Administration's tax cut bills.
EGTRRA gradually phases out the estate tax until it is fully repealed in 2010. However, without permanent repeal or some type of reform, the tax will come roaring back in 2011 to its pre-2001 level — a 55% tax rate on amounts exceeding a $1 million exemption.
Under current law, this year there is a minimum tax rate of 46% on the amount that exceeds a $2 million exemption.
Senator Frist could seek another vote on the issue by attempting to forge a bipartisan compromise that would fall short of outright repeal but significantly scale back the tax.
While several proposals have been floated, the one receiving the most attention was put forth by Sen. Jon Kyl (R-Ariz.). His plan would allow individuals to exempt the first $5 million of their estate from taxes ($10 million per couple) and levy a tax of 15% on amounts between $5 million and $30 million and 30% above $30 million.
NAHB is monitoring these negotiations closely and continues to press for full repeal of the estate tax.
To read the legislation, click here and enter H.R. 8 in the box at the middle of the page.
For more information, e-mail Greg Brown at NAHB, or call him at 800-368-5242 x8421.
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