KYL	FRIST

L

The Senate pro-repeal side suffered a blow June 8, when it came up three votes short of the 60 needed to end debate on the bill. The House had passed its permanent repeal measure in April 2005. Sen. Jon Kyl (R-Ariz.) and others who back repeal had hoped to offer an alternative that would widen the number of estates exempt from the tax and trim rates paid by the wealthiest Americans.

Under current law, estate taxes phase out until 2010, when they will be completely repealed. But in 2011, the tax will be reinstated for estates worth more than $1 million.

Construction groups weren’t happy about the Senate vote. Heidi Blumenthal, Associated General Contractors’ director of government affairs for tax and fiscal affairs, acknowledges lawmakers can disagree about a bill’s final shape, “but they didn’t even get to the discussion, and that’s incredibly disappointing, because this is something that affects people deeply—their jobs and their lives.”

At the Associated Builders & Contractors, Director of Legislative Affairs Carin Nersesian says most members are family-run, small firms “that sadly right now are spending more money and effort trying to avoid the death tax coming back in 2011 than they do in hiring new people, buying new equipment and... keeping that economic engine running.”

Senate Majority Leader Bill Frist (R-Tenn.) vows that this will not be the end of issue. “This won’t be the last time this year the Senate votes on this important issue, be it on the floor or in some other form.”

For now, it isn’t clear what form that legislation will take. “In a very politically charged election year this maybe [is] as close as we get,” says Steve Hall, American Council of Engineering Companies’ vice president for government affairs. “And it may be that [repeal] crosses the line sometime next year, out of election season.”

Some suggest repeal supporters are moving toward something similar to Kyl’s plan. Macey Davis, tax counsel for the National Federation of Independent Business, says, “There are still negotiations taking place toward compromise. Whether or not that has legs remains to be seen, but I think the issue is very much alive.”

AGC favors permanent repeal, but Blumenthal says its members could live with a final bill similar to Kyl’s concept. “The Kyl amendment is common sense. It makes sense for small business and it makes sense for America,” she says.

 

egislation that would have permanently repealed the estate tax has hit a roadblock, after Senate supporters failed to garner enough votes to cut off a filibuster. There is talk of another try for repeal or a compromise short of that goal. But observers say the outlook for those plans isn’t certain.