Members of the U.S. House voted 269-156 Thursday to pass a bill that would increase the estate tax exemption to $5 million per individual, or $10 million for a married couple.
The bill that passed, an amended version of H.R. 5638, would set the estate tax rate at a level equal to the capital gains tax rate for estates with $5 million to $25 million in assets, and it would set the estate tax rate at twice the level of the capital gains tax rate for estates with more than $25 million in assets, according to the bill text.
The current capital gains tax rate is 15%. The rate is scheduled to jump up to 20% in 2011.
Rep. Jim McDermott, D-Wash. observed during floor debate about the bill that “scarcely a dozen” House members were actually in the chamber. He said the rest, watching on television from their offices, were seeing “not the House of Representatives but the theater of the absurd.”
The estate tax was started by a “public-spirited Republican,” Teddy Roosevelt, McDermott said.
“It is used as way to finance the things that we think we ought to do,” McDermott said. “You talk about the calls you receive from you district. Bill Gates called me, and he said, ‘Don’t vote for estate tax repeal.’”
Rep. Bill Thomas, R-Calif., chairman of the House Ways and Means Committee and primary author of the bill, said Gates’ call was misplaced.
“We are not voting to repeal the death tax,” Thomas said. “We are producing a compromise which will be passed by this House and move to the other chamber.”
Thomas said new version of H.R. 5638 passes the “Goldilocks test.”
“For some it’s too hot, for some it’s too cold,” Thomas said. “It sounds to me like we’ve got a compromise that might have chance at being passed by the U.S. Senate.”
Rep. Richard Neal, D-Mass., referring to an advertising campaign backed by the Coalition for America’s Priorities, a group that is believed to have support from the life insurance industry, said H.R. 5638 should be called “the Paris Hilton Tax Relief Act.”
“She will be in great spirits this evening when she finds out that the Republican party has come to her aid again,” Neal said. “This Congress has bent over backwards to help the richest in this country. Is there no end to this?”
Many members of the House and Senate have concerns about the effects of estate tax changes on federal revenue.