On June 12, the Senate rejected, 54-44, legislation (H.R. 8) that would have permanently phased out the estate and gift taxes over a ten-year period. Although a majority of Senators voted in favor of the measure, 60 votes are required to pass the legislation under Senate rules governing budget-related proposals. Similar legislation was approved by the House on June 6 (see The Source, 6/7/02).
Proponents argued that the estate tax should be repealed because it negatively impacts economic growth and unfairly penalizes small businesses and family farms. Opponents contended that the estate tax brings in needed revenue, is vital to fiscal policy, and encourages charitable giving.
The Senate rejected, 38-60, an amendment by Sen. Kent Conrad (D-ND) that would have made the tax repeal permanent except for estates over $3.5 million for individuals and $7 million for couples.
The Senate also rejected, 44-54, an amendment by Sen. Byron Dorgan (D-ND) that would have raised the tax exclusion to $4 million and would have made the estate tax changes permanent after December 31, 2009.
Arguing in favor of the estate tax repeal, Sen. Kay Bailey Hutchison (R-TX) said this “really is not a fair tax. It affects a lot of regular people, people in a situation where something was purchased at very low cost, but they have built it or their heirs have built it, and they have a right to keep it.” She added, “We need to eliminate it so that the people of our country can plan for their children’s futures, so they will not have to do crazy things to try to protect property or businesses or assets that have been in their families for generations.”
“We are bleeding red ink. We have been attacked on our shores,” said Sen. Hillary Rodham Clinton (D-NY), speaking in opposition to the bill. “Repealing the estate tax would cost about $100 billion this decade, but in the next decade when people like me are starting to retire, then we are looking at a cost of $740 billion,” she continued. “It is hard to imagine from where the money to provide for Social Security and Medicare will come,” she added.
