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Estate Tax Repeal Emerges As Pivotal Budget Issue
National Journal's CongressDaily March 8, 2004
Senate Budget Chairman Nickles' proposal to repeal the estate tax in 2009 -- one year earlier than scheduled under current law -- is shaping up to be one of the main tax policy fights of this budget season. Democrats may offer an amendment this week during Senate floor debate on the FY05 budget resolution to remove that provision from reconciliation protection or strike it entirely, Capitol Hill sources said.
Anti-repeal advocates led by the group Responsible Wealth Project are lobbying senators this week to oppose the provision, capping their efforts with a Wednesday speech at the National Press Club by former Federal Reserve Chairman Volcker and Bill Gates, Sr. But small business proponents of estate tax repeal warned they would make any amendment "to strike or water down" the current estate tax provision a "key vote" in 2004 vote ratings. "Eliminating the death tax in 2009 will give small business owners two full years of freedom from this burdensome and unfair tax," said National Federation of Independent Business President Jack Faris in a statement today.
The budget resolution approved by the Senate Budget Committee last week includes reconciliation instructions that could be used to protect up to $80.6 billion in tax cuts from filibuster. That figure allows room for the $3.5 billion needed for the additional year of estate tax repeal and $77 billion from a five-year extension of accelerating tax cuts for married couples, families with children and taxpayers affected by a scheduled expansion of the 10 percent bracket. But Senate Finance Chairman Grassley has said he expects not to have to use reconciliation protection for any extension of expiring tax cuts.
Current law would tax inheritances over $3.5 million in 2009, but Nickles' budget plan envisions removing that cap completely for a full repeal in both 2009 and 2010. Under current law, that repeal would take effect for just one year in 2010, and in 2011 the estate tax would return to a 55 percent top rate for inheritance income over $1 million.
Copyright © 2004, National Journal All rights reserved.
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