Senators who oppose estate tax repeal today succeeded at keeping the issue off the floor.
Supporters of the bill, H.R. 8, needed 60 votes to invoke cloture, or protect the bill from a filibuster by limiting debate on the bill, but the final vote was 57-41.
The insurance industry lobbied against the bill, and some analysts have suggested that the bill could have caused problems for core life insurance products.
In comments derided in an editorial today in the Wall Street Journal, Frank Keating, president of the American Council of Life Insurers, is quoted as saying, “I am institutionally and intestinally against huge blocks of inherited wealth. I don’t think we need the Viscount of Enron or the Duke of Microsoft.”
An ACLI official confirmed the quotes.
As cited also by WSJ and noted by lawmakers in floor comments, the industry is the main source of revenue for an antirepeal advocacy group called the Coalition for America’s Priorities. One ad cited by the WSJ in its editorial, which supported full repeal, is a sound-alike of heiress Paris Hilton praises the Senate as “like awesome” for cutting her family’s taxes.
After the vote, the Senate Republican leadership withdrew to determine whether they would seek an immediate vote on a compromise reform bill that would have substantively slashed the estate tax, and which Democrats called a stealth attempt at full repeal.
Some say the vote could also cause problems for efforts by Sen. John Kyl, R-Ariz., the chief sponsor of repeal, to get a compromise bill passed.
One compromise bill would have established a $5 million threshold for the estate tax and taxed assets above that level at 15%, the capital gains rate. But on Wednesday, June 7, Sen. Charles Grassley, R-Iowa, chairman of the Senate Finance Committee, sought to sweeten that for Democrats by proposing to tax all assets above $30 million at 30%.
Sen. Harry Reid, D-Nev., minority leader, said, however, during the debate leading up to the cloture vote that, compromise “is full repeal anyway,” adding that it “doesn’t even pass the laugh test,” and calling it a “pig in a poke.”
Under current law, the threshold gradually rises from $1.5 million in 2005 to full repeal in 2010. But unless the law is renewed, the tax would revert to 2001 levels, a $1 million threshold per spouse and a 55% tax rate above that level.
Insurance agents, through the National Association of Insurance and Financial Advisors and the Association for Advanced Life Underwriting, support a reform package with a $2.5 million exemption and a top rate of 45%.