The Senate defeat of a bill on June 12 that would have permanently repealed the “death tax” angered supporters of estate-tax reform in the electrical industry and in Beltway trade associations representing small businesses.
The House had already passed permanent death tax repeal. But though a 54-vote majority in the Senate supported permanent repeal, the measure failed to garner the 60 votes needed under Senate rules. Republicans promised to use their legislative defeat as an issue in the election campaign this fall.
Federal estate tax law, enacted one year ago as part of President Bush's tax relief bill, completes a phase-out of the death tax in the year 2010, but reinstates the levy in 2011. President Bush supports permanent repeal of the estate tax, and on June 6 the House of Representatives passed legislation to make repeal permanent.
Following the vote, Dirk Van Dongen, president of the National Association of Wholesaler-Distributors (NAW), Washington, D.C., expressed “bitter disappointment” in the Senate's failure to permanently repeal the death tax.
“This Administration and its allies on Capitol Hill understand that the Federal estate tax destroys businesses and the jobs they produce,” Van Dongen said. “That temporary repeal fails the test of sensible economic policy because it inhibits affected employers from rational long-term planning.
“From this vote it should be clear to anyone watching, who is working to implement a pro-growth economic agenda that responds to the concerns of small family-owned businesses and the millions of working people they employ and who isn't.”
Vowing to continue its fight to have the death tax permanently repealed, the National Association of Manufacturers (NAM), Washington, D.C., called the Senate's defeat of the legislation both “shortsighted” and “harmful to America's small, family businesses.”
“It's unfortunate that some senators lost their nerve since last voting in favor of this much-needed piece of tax relief legislation,” said NAM Vice President for Tax Policy Dorothy Coleman.
Supporters of estate-tax reform had embarked on a mammoth lobbying effort to sway the necessary votes on Capitol Hill with grass-roots support from businesses, farmers and voters.
For instance, during the week before the vote, the National Federation of Independent Businesses (NFIB), Washington, D.C., faxed alerts to approximately 82,000 of its small-business members in 17 states represented by senators whose votes are key to the passage of the permanent death-tax-repeal legislation, which is sponsored by U.S. Sens. Phil Gramm (Texas) and Jon Kyl (Ariz.).
NFIB President Jack Faris said the defeat was a temporary setback.
“Although a clear majority of the Senate today agreed with a clear majority of the American people that the death tax should be repealed permanently, a minority was able to block the will of the people — temporarily. The next vote on the death tax will be at the ballot box on Nov. 5, and small family business owners are going to flex their political muscles and hopefully repeal some of the Senators who voted the wrong way today.”