After several hours of contentious debate, the House approved, 256-171, legislation (H.R. 2143) that would make permanent the phase-out of the estate, gift, and generation-skipping taxes included in the tax cut package (P.L. 107-16) enacted last year. Proponents of the measure contended that the repeal of the estate tax would immediately benefit family-owned farms and small businesses and would have a positive impact on jobs and the economy. Opponents argued that only 2 percent of American families pay estate taxes, and the bill would benefit only the wealthiest families.
Under current law, the estate, gift, and generation-skipping taxes are phased-out over a ten-year period. The unified credit exemption from the estate tax will increase from $1 million in 2002 to $1.5 million in 2004, $2 million in 2006, and $3.5 million in 2009. In 2010, all estate taxes will be repealed.
All the provisions in last year’s tax law, including the elimination of the estate tax, are scheduled to expire after December 31, 2010. Under H.R. 2143, the sunset for elimination of the estate, gift, and generation-skipping taxes would be repealed.
The House rejected, 197-231, a substitute amendment by Reps. Earl Pomeroy (D-ND) and Karen Thurman (D-FL) that would have frozen the maximum estate tax at the current rate of 50 percent and would have increased the estate tax credit to $3 million for individuals and $6 million for married couples in 2003.
Additionally, the House rejected, 205-222, a motion by Rep. Charles Stenholm (D-TX) to recommit the bill with instructions to include an amendment that would have prohibited any tax reduction in the bill that would require the use Social Security funds.
Arguing in favor of the bill, Rep. Jennifer Dunn (R-WA) said, “Opponents of repeal say that it only helps the super wealthy, but that’s not true.” She continued, “Opponents ask, ‘Why not make an exception for small businesses and family farms?’” She added, “We already did that, and it didn’t work.” She pointed out that more than 100 organizations favor the estate tax repeal, including minority and women-owned business groups.
Quoting Microsoft Chairman Bill Gates, Rep. Thurman asked, “‘How much are Americans willing to pay in order to give a handful of millionaires and billionaires a tax cut?’” She added, “This bill simply will not work” without robbing the Social Security and Medicare Trust Funds.