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washingtontimes.com

House OKs full repeal of 'death tax'

By Stephen Dinan

THE WASHINGTON TIMES

The House yesterday passed its third major tax bill of the year, a permanent repeal of the inheritance tax, as Republicans continued to make good on their promise to exhaust the full $1.2 trillion of tax relief allowed in their budget.

Also, Republican leaders said there is evidence that the $350 billion tax-cut package signed into law last month is causing a change in the financial markets and investment practices.

The estate tax repeal builds on the 2001 tax cut, which phases out the tax until it disappears altogether in 2010. Under the 2001 law, the tax would be reinstated in full in 2011.

Yesterday's bill, totaling $162 billion in reduced revenue over the next decade, would end the tax permanently. It passed 264-163, with 41 Democrats joining 223 Republicans in supporting it and four Republicans joining 158 Democrats and one independent in opposing it.

"This isn't just for rich people. It's for everybody who shares in the American dream," said House Speaker J. Dennis Hastert, Illinois Republican.

The legislation faces a hurdle in the Senate, which failed in the 107th Congress to pass any of the three versions passed by the House.

Senate Minority Leader Tom Daschle, South Dakota Democrat, said yesterday that he doesn't believe Republicans have the votes this year, either.

"I don't think they have the votes to repeal, but we're only talking about 1.5 percent of the people who pay estate taxes today who would be affected by repeal," he said. "Those people whose incomes lie above $8 to $10 million are not ones we ought to be concerned about when we have a $500 billion deficit this year."

Democrats in the House offered a substitute version that would have raised the estate tax exemption to $6 million for a married couple, and would have done so as of 2004.

"Something that takes effect in '04 is much more related to getting the economy moving again than something that has no effect until 2011," said the sponsor of the alternative, Rep. Earl Pomeroy, North Dakota Democrat.

But Republicans said the issue resonates with voters, even the vast majority of those who will never benefit from it, because it's a matter of fairness.

"They're cheering that because they think it is a moral issue," said Rep. John Linder, Georgia Republican. "People should be able to pass on what they earn."

The Bush administration issued a policy statement endorsing the House estate tax repeal and calling it "a matter of basic fairness."

"The time to fix this problem is now, so American families, small businesses, and farmers can organize their estates without worrying about whether their plans will be jeopardized by a re-emergence of the death tax," the statement said.

Republicans also took the opportunity yesterday to tout the $350 billion tax-cut package and its effects on the economy.

They pointed to the Nasdaq, which has risen 10.7 percent since Congress passed the conference report on the bill May 23, and the S&P 500, which has risen 8.6 percent during that time.

"The market also is another early indicator. It's beginning to show that there is optimism and confidence about the future of the economy," said House Majority Whip Roy Blunt, Missouri Republican.

He and other Republicans said there is plenty of anecdotal evidence that the incentives for small businesses are beginning to spur investments and hirings.

But Democrats said that if anything should be learned from the past two years, it's that long-term trends, not day-to-day positions of the market, are key.

"I'm sure they'll take responsibility if there's a nose dive," said Rep. Robert Menendez, New Jersey Democrat and chairman of the House Democratic Caucus.