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House Kills Estate 'Death Tax'

estate tax
AP
The House voted Wednesday to eliminate federal estate taxes in 2010 and beyond, a repeal that Republicans hailed but Democrats said would reward the richest families at the steep cost of deeper federal deficits.

House lawmakers voted 272-162 to prevent the tax on inherited estates from reappearing after its one-year disappearance in 2010. The bill would end the tax at a cost of roughly $290 billion over the next decade.

The House has passed bills repealing the tax several times since enacting the 2001 law that lifted the tax for a year. Those bills have languished in the Senate. Supporters hope a bigger Republican majority there could mean the difference this year, but Sen. Jon Kyl, R-Ariz., refused to predict the likelihood of success.

"We are working to see what the best approach is," he said.

In a statement released after the House vote, President Bush called the elimination "a matter of basic fairness." He said, "The death tax results in the double taxation of many family assets while hurting the source of most new jobs in this country — America's small business and farms."

Other Republicans agreed and said an estate tax — imposed on any estate left to an heir — discriminates against some families simply to raise money for government spending.

Rep. Christopher Cox, R-Calif., said those pushing to retain a tax "still want to pry lots of cash out of the cold, dead fingers of America's deceased entrepreneurs."

House Democratic Leader Nancy Pelosi, D-Calif., said the bill favored the "super rich" and would make federal deficits worse.

"Do we want to continue reckless Republican tax policies or to return to a fair system of taxation?" she said.

Republicans have pressed to banish permanently the estate tax since passing President Bush's first tax cut and repealing the levy for one year — in 2010.

That tax cut set the estate tax on a decreasing path ending with repeal at the end of the decade. Until then, the size of an estate exempt from the tax gradually increases and the top rate on taxable estates gradually falls.

This year, estates worth up to $1.5 million for an individual or worth $3 million for a couple owe no tax. The top tax rate stands at 47 percent. Just before its complete repeal, in 2009, the exemption increases to $3.5 million for an individual or $7 million for a couple. The tax rate falls to 45 percent.