The Senate this week chose to take a moderate approach to reducing estate taxes.
Members of the Senate voted 97-1 Wednesday to approve a measure that could lead Congress to continue the estate tax rate at 2009 levels starting in 2010.
Under current law, the top estate tax rate will be 45% in 2009, and the exemption will be $3.5 million per person. But the estate tax is supposed to spring back to pre-2001 levels after 2010, when the estate tax provision in Economic Growth and Tax Relief Reconciliation Act of 2001 is set to expire.
In the past, life insurance groups have supported estate tax proposals using the 2009 estate tax figures.
The amendment approved, Amendment Number 492, was introduced by Sen. Max Baucus, R-Mont.
Baucus attached the amendment to the 5-year budget resolution, a document that is supposed to guide Congress when it starts budget negotiations later this year.
The Senate passed the budget resolution today by a 52-47 vote.
Although the budget resolution does not directly affect appropriations, Senate rules let appropriations bills that follow budget resolution guidelines pass the Senate via majority votes.
Under regular order, a bill needs 60 votes to get through the Senate without running the risk of facing a filibuster.
The Baucus amendment does not directly mention the estate tax. Instead, the amendment would let Congress use up to $180 billion to cut a variety of taxes, including the federal estate tax. But Baucus talked about making the 2009 estate tax rules permanent during a discussion of his amendment on the Senate floor.
Senators rejected several other budget resolution estate tax amendments this week.
Members of the Senate voted 51-48 against Amendment Number 583, offered by Sen. John Kyl, R-Ariz.
The Kyl amendment would have increased the exemption on estates to $5 million per person, indexed for inflation, and set the top death tax rate at no more than 35% beginning in 2010.
Kyl led the effort in prior Republican-controlled Congresses to pass legislation that would have repealed the estate tax or cut it sharply.
Senators voted 55-44 against Amendment Number 578, offered by Sen. Jim DeMint, R-S.C.
The DeMint amendment would have repealed the estate tax completely in 2010.
Senators voted 74-25 against Amendment Number 626, offered by Sens. Ben Nelson, D-Neb., Blanche Lincoln, D-Ark., and Mary Landrieu, D-La.
The Nelson-Lincoln-Landrieu estate tax amendment would have lowered the top effective tax rate to 35% and increased the exemption to $5 million. But that proposal also would have been subject to the Senate’s pay-as-you-go rules, which would mean that the Senate would have to raise taxes or cut spending to offset the cost of the anticipated estate tax revenue reductions. Most Republicans voted against the amendment.