Senate Republicans have postponed a vote on changing the estate tax, saying they will not vote on the matter until after July 10, when Congress returns from its Independence Day recess.
The decision may be a sign that Republican leaders still lack the 60 votes they need to clear the estate tax bill they support for floor debate.
The bill under consideration, H.R. 5638, “The Permanent Estate Tax Relief Act of 2006,” passed the House Thursday by a 269-156 vote.
“The House of Representatives made tremendous progress last week toward achieving a permanent solution to the death tax,” Senate Majority Leader William Frist, R-Tenn., says in a statement about the decision to postpone a Senate vote on H.R. 5638.
“Now it’s up to the Senate to decide whether it can improve upon the House bill or whether this is the bill that should be sent to the president for his signature,” Frist says. “Everyone should be clear: The Senate will vote on a permanent reduction to this tax — a tax that destroys small businesses and family farms…. The vast majority of my Democratic colleagues have so far refused to address this issue; it’s my hope that their constituents will use the upcoming recess to explain the importance of supporting a reasonable and permanent solution to this unfair tax.”
Some Republicans appear to share Democrats’ concerns about the possible effects of H.R. 5638 on the federal budget deficit.
The House bill would increase the exemption amount to $5 million per person effective Jan. 1, 2010, and it would reduce the tax rate on estates up to $25 million to the capital gains tax rate.
The bill also would reduce the rate of tax on estates of $25 million or more to twice the capital gains rate.
The exemption for 2006 is $2 million per person and the maximum tax rate is 46%.
Under present law, the exemption gradually rises to full repeal in 2010. But, unless the law is renewed, the tax would revert to 2001 levels, which allowed only a $1 million exemption per spouse and imposed a maximum tax rate of 55%.