Just a week after the House voted to make permanent a repeal of the estate tax, the measure was dealt a fatal blow in the Senate. A 54-44 procedural vote June 12 on permanent repeal was six votes short of the 60 needed, dooming the measure. Two Democratic alternatives also were defeated.
Last year Congress passed a $1.35-billion tax-cut package that phases out the estate levy by 2010. But under that law, the tax will revert to its 2001 level in 2011.
The House vote on June 6 to make the repeal permanent was 256 to 171. The difference in outcome underscores philosophical differences between the GOP-led House and the Democratic-controlled Senate.
Repealing the estate tax has the support of President Bush and has been a top priority of many design and construction groups. Phil Thoden, the Associated General Contractors' director of tax and fiscal affairs, says his group was disappointed with the Senate result, especially because the margin was so small. "We waged a long campaign to make death tax elimination permanent and came just a few votes short. We will be back again," Thoden says.
The U.S. Chamber of Commerce also criticized the Senate action. "Death should not be a taxable event," declared Chamber President and CEO Thomas Donohue. He also vowed to renew the push for full repeal.
But Senate Democrats who opposed permanent repeal argued that permanent repeal was too expensive, estimated to cost the Treasury $740 billion from 2012 through 2021.