House considers rolling back estate tax
WASHINGTON (CNN) -- The House was moving ahead Wednesday on a proposal to eventually erase the estate tax, as Congress focused on the nuts and bolts of the Bush administration's budgeting and tax relief proposals.
The House engaged in a vigorous debate on a Republican proposal to roll back the estate tax, referred to by the chamber majority as the "death tax," with passage expected late in the afternoon.
The bill is the third portion of the House's three-pronged approach to tax relief. Last month, the House passed a bill that would drop income taxes by restructuring the rate system, at a 10-year cost to the federal government of about $958 billion.
Last week, the House passed a bill that would gradually eliminate the extra taxes paid by many married couples who file joint tax returns. That bill also would double the per-child tax credit to $1,000 by 2006, and would cost the government about $399 billion over 10 years.
The Republican bill under consideration Wednesday would dismantle an estate tax regime that has been in place for some 85 years. At present, estates with assessed values of more than $675,000 are subject to the levy, which many members of both parties agree puts undue strains on family farms and small businesses.
What they don't agree on is how to solve the problem.
The GOP bill would likely cost the government some $185.5 billion in tax receipts over 10 years, but its effects would likely not be felt until the very end of that decade-long period.
The Republican bill, drafted by Ways and Means Committee member Jennifer Dunn, R-Washington, would fully eliminate the estate tax by 2011. Democrats argued that the benefit would not be extended to small business, farmers and others who would need the relief until that time, 10 years hence.
"Americans spend much of their adult lives paying taxes in various forms," Dunn said Wednesday. "We should end this practice of paying a tax that is triggered only by debt."
The Bush administration and the Republicans in the House are hoping to make up for the lost income by pulling funds from a budget surplus that the Congressional Budget Office predicted last year would amount to $5.6 trillion by 2010.
The combination of the three tax bills, Republicans say, closely fits President Bush's call for $1.6 trillion in tax cuts by 2011.
Democrats continued their arguments Wednesday that the surplus projections shouldn't be considered reliable, and they tried to find weakness in the Republican line of argument.
The opponents of the bill presented statistics showing that only 2 percent of all estates are now valued over the $675,000 threshold.
The way the Republican bill is worded, Democrats argued, only a few thousand estates might stand to reap any benefit in the next decade.
"They don't repeal the death tax for a single American next year," said Rep. Lloyd Doggett, D-Texas. "They don't repeal the death tax for the next decade. Their very hope is that in the next decade, we will have a Congress that is as fiscally irresponsible as this one."
Republicans argued that they were eliminating the tax, while a Democratic plan to raise the $675,000 threshold to $2 million left the tax intact.
The House will take up the rival Democratic plan later in the day.
"We ought not lose sight of the fundamentals in this debate," said Rep. Bill Thomas, R-California, chairman of the Ways and Means Committee. "The Republican bill repeals the estate or death tax, and the Democrats do not."
CNN's Ian Christopher McCaleb contributed to this report.
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