Senate Refuses To Kill 'Death Tax'

Senate Democrats dealt defeat Wednesday to President Bush's call for permanent repeal of the estate tax, and Republicans signaled plans to turn the vote to their advantage in the fall campaign for control of Congress.

The vote was 54-44, six short of the 60 required under Senate rules to approve the measure, which Republicans said represented simple fairness and Democrats derided as a giveaway for the super rich.

"Strip it all away, this is a tax relief for billionaires when we have a very big deficit and we have other priorities," such as health care, education, Social Security and Medicare, argued Sen. Byron Dorgan, D-N.D.

Sen. Phil Gramm, R-Texas, countered that opponents of the repeal measure "believe it is worth forcing people at the death of their parents to sell off their life's work to give half of it to the government."

The president expressed disappointment. "It is wrong that, as a result of a quirk in the law, millions of Americans will be subject to the death tax beginning at the end of the decade," Mr. Bush said in a written statement. "The Congress must fix this unfair tax and provide families with certainty so they can plan for the future."

Defeated on the estate tax repeal, congressional Republicans quickly set their sights on ending so-called marriage tax penalties before the November elections.

"We think we have a chance of making it permanent," Rep. Rob Portman, R-Ohio, said of the break that last year's GOP-sponsored tax cut granted to married couples.

"It's extremely important to millions of couples who would otherwise face a steep tax increase nine years from now," Portman, a member of the House's tax-writing Ways and Means Committee, said Wednesday.

Given the Republican majority in the House, the marriage penalty measure seemed likely to pass. Democrats, eager to show their support for tax cuts, but also determined to show concern about other priorities, were advancing an alternative. It would make the permanent extension of the marriage-penalty tax-relief contingent on a formal declaration that none of the money would come from the Social Security or Medicare trust funds.

Gramm, nearing the end of an 18-year conservative's career, led the fight for estate tax repeal in the Senate.

Rebutting Democratic criticism, he said opponents of the repeal measure "believe it is worth forcing people at the death of their parents to sell off their life's work to give half of it to the government."

Democrats advanced two alternatives in the run-up to the final vote, both of which fell short of the 60-vote threshold required by Senate rules.

One option, which got 38 votes, would have made the tax repeal permanent for all but the largest estates — those over $3.5 million for individuals and $7 million for couples. The second, which gained 44 votes, would have added permanent relief for all family-owned farms and small businesses.

Gramm belittled the Democratic tactics, saying their proposals were not designed to help taxpayers, but were "about protecting 40 senators by giving them a fig leaf when they vote" against killing the tax.

The repeal measure was passed by the House last week on a vote of 256-171 and drew the support of 41 Democrats, an indication of the political potency of the issue in rural areas.

"It's very much an issue in the campaign for folks who vote against it," said Ginny Wolfe, spokeswoman for the GOP senatorial campaign committee. "Is this an issue which on its own will make or break a single election? Probably not. It's an additional burden on vulnerable Democrats who vote the wrong way."

"Republicans will try but they're going to have a hard time" making use of the issue, countered Tovah Ravitz-Meehan, spokeswoman at the Democratic campaign committee. "Being fiscally responsible" will be attractive to voters, she said.

The bill drew the support of 45 Republicans and nine Democrats, including three who are on the ballot this fall — Sens. Max Baucus of Montana, Max Cleland of Georgia and Mary Landrieu of Louisiana. Three other Democrats facing tough challenges — Sens. Paul Wellstone of Minnesota, Jean Carnahan of Missouri and Tim Johnson of South Dakota — voted for at least one of the Democratic alternatives.

Voting in opposition were 41 Democrats, one independent and Republican Sens. Lincoln Chafee of Rhode Island and John McCain of Arizona.