Republicans Turn Attention to Abolishing Estate Tax
JOHN YDSTIE, host:
President Bush, this week, is expected to sign into law $70 billion in tax cut extensions, partly for people who pay taxes on dividends or capital gains. Another element on the Republican tax cut agenda is a permanent repeal of the estate tax. That's still pending in the Senate. Republicans hope to finish the job soon, but it may not be as easy as they had hoped.
NPR's Kathleen Schalch reports.
KATHLEEN SCHALCH reporting:
Under current law, 2010 is the only year when there will be no estate tax. That's because five years ago, Republicans wanted to repeal the tax, but didn't have the votes. So they pushed through a law that would phase it out by 2010, then reinstate it in 2011. Of course, Congress meant to come back later and make the repeal permanent. And, indeed, in 2005, the House did vote to end the estate tax for good. The Senate was expected to follow suit right after Labor Day, according to Dick Patten who heads the anti-tax American Family Business Institute.
Mr. DICK PATTEN (Executive Director, The American Family Business Institute): We got to a point where the Senate majority whip's staff agreed with us that we had the votes to achieve repeal...
SCHALCH: Then came Hurricane Katrina. The vote got delayed, and now, Arizona Republican Senator Jon Kyl has warned supporters that prospects for a complete victory might be receding.
Senator JON KYL (Republican, Arizona): The problem is, and I'm sorry to say, we probably lost some votes for full repeal.
Mr. DAN CLIFTON (Chief Economist, Americans for Tax Reform): Support has waned for a number of reasons...
SCHALCH: Dan Clifton is chief economist for another anti-tax group, Americans for Tax Reform. He says one reason support waned was the prospect of a deeper deficit. Congressional budgeters say repealing the estate tax for even a decade could cost the treasury a trillion dollars. And, Clifton says, the overall political climate has cooled.
Mr. CLIFTON: Because the President's approval ratings have fallen.
SCHALCH: Groups that want to preserve the tax have gotten organized, as well.
Unidentified Man: What do we want?
Unidentified Crowd: (Unintelligible) money!
Unidentified Man: How do we want it?
Unidentified Crowd: Tax-free!
SCHALCH: Members of Billionaires for Bush showed up at a recent press conference in tuxedos and top hats, carrying photos of Paris Hilton. At the same event, Joan Claybrook, president of Public Citizen, unveiled a study alleging that 18 of the nations wealthiest families, worth an average of a billion dollars each, have funded and orchestrated the ten-year campaign to repeal the tax.
Ms. JOAN CLAYBROOK (President, Public Citizen): We are here today to expose one of the biggest con jobs in recent history.
SCHALCH: Estate tax defenders say the repeal movement has been misleading the public by calling the estate tax a death tax. Surveys, including a 2003 NPR/Kaiser/Kennedy School poll on taxes, do reveal some confusion. That poll found nearly half the country thought estate taxes are paid by most Americans. In fact, this year, only one estate in 200 will pay the tax. That's because the first $2 million of any estate is exempt. Steve Richetti is co-chairman of a group called the Coalition for America's Priorities.
Mr. STEVE RICHETTI (Co-Chairman, Coalition for America's Priorities): What we have learned is, that as soon as people learned the most fundamental fact about the estate tax, which is that 99.5 percent of everyone in America will never pay an estate tax, their views about whether it's desirable or not changed dramatically.
SCHALCH: Dick Patten of the American Family Business Institute disputes this.
Mr. PATTEN: Americans, more than two to one, resonate with the issue of repealing the estate tax. This is an issue that violates America's core sense of fairness, and justifiably so.
SCHALCH: And surveys do show that many who won't have to pay the tax do think it's unfair. Repeal supporters are still running ads in states where senators may be undecided. But Arizona's Jon Kyl says opponents of the tax may have to settle for scaling it back.
Sen. KYL: We're heading toward that cliff of 2011. Our political position could be dramatically negatively impacted this fall, and after the next presidential election.
SCHALCH: Some Senate Republicans want to double or triple the exemption, or cut the rate from roughly 50 percent down as low as 15 percent. Many Democrats also prefer a compromise. But backers of the tax remain wary. They say slashing the rate or boosting the exemption too much would cost the treasury nearly as much as doing away with the tax altogether.
Kathleen Schalch, NPR News, Washington. Transcript provided by NPR, Copyright NPR.