House Democrats To Ditch Permanent Estate Tax Bill For 1-Year Fix
By Martin Vaughan, Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- House Democrats are retreating from a plan to move
permanent estate tax legislation by the end of the year, spooked by high
unemployment and budget deficits.
Members of the House Ways and Means Committee said that instead they hope to
move legislation that extends current estate tax levels for one year. They could
then revisit a permanent fix to the estate tax in 2010, when other tax cuts
enacted under the administration of former President George W. Bush are slated
to expire.
The tax this year is levied on estates exceeding $3.5 million at a 45% rate.
But if Congress does nothing, the tax will be repealed entirely for one year in
2010, before snapping back to tax all estates over $1 million at 55% in 2011.
President Barack Obama has proposed extending the 2009 estate tax levels
permanently. Budget blueprints passed by the House and Senate earlier this year
made room for a multi-year estate tax fix.
But House Democrats are blanching at the $256 billion, 10-year cost of making
the 2009 policy permanent. As millions of low-income and middle-income Americans
are struggling to climb out of the recession, they don't want to cast a vote in
favor of what amounts to a huge tax cut to the richest families.
"At a time when you have 10.2% unemployment--are you crazy?" said Rep. Jim
McDermott (D., Wash.) He said that uncertainty about whether the Senate would be
able to pass a permanent estate tax fix has given many House Democrats pause.
"We're all going to be elected again in a year. The Senate is looking at five
years from now, so they're not thinking of that," McDermott said.
House Democrats are also crafting legislation aimed at boosting jobs with new
infrastructure spending and renewing tax breaks for businesses, which could also
add to the deficit.
Democrats on the House Ways and Means committee voiced support for a one-year
estate tax bill in a closed door meeting Wednesday. Rep. Earl Pomeroy, (D.,
N.D.) said he was among a "distinct minority" arguing for a permanent fix.
"We need to fix this. It is time to restore certainty to the tax code,"
Pomeroy said. He added that conservative Blue Dog Democrats, who are pushing for
a permanent estate tax bill, may oppose a rule on House one-year fix, creating a
potential procedural obstacle for House leaders on the floor.
Blue Dogs reached a deal with House Speaker Nancy Pelosi (D., Calif.) earlier
this year to support a permanent estate tax bill that increased the deficit, but
only if Congress passed legislation codifying pay-as-you-go rules in place for
the future. But the Senate has shown no signs of acting on the pay-go bill.
Senate tax-writers are discussing moving an estate tax bill as part of end-of-
year legislation that extends business tax cuts, health insurance for the
unemployed, and expiring tariff preferences. But it remains unclear what form
the Senate estate tax measure would take.
"It would be disappointing if Congress chose not to take on substantial estate
tax reform this year," said Dena Battle, director of tax policy at the National
Association of Manufacturers. "We are still working with lawmakers in the House
and Senate on legislation that would give our members the relief they need."
Another business lobbyist who is pushing to reduce the estate tax downplayed
the House's pivot, saying that the short-term extension was an expected fall-
back position.
But linking a permanent estate tax fix to tax reform potentially pits it
against Democratic priorities like the child tax credit and other tax breaks for
the poor and the middle class, which wouldn't bode well for estate tax
opponents, the lobbyist said.
-By Martin Vaughan, Dow Jones Newswires; 202-862-9244; martin.vaughan@
dowjones.com
(END) Dow Jones Newswires
11-18-091516ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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