Policy Update

House Passes Estate Tax Repeal

4/18/2005

On April 13 the House of Representatives passed a bill (H.R. 8) to repeal permanently the estate tax by a vote of 272 to 162.

During consideration of the bill, the House rejected, 194 to 238, a compromise offered by Rep. Earl Pomeroy (D-ND) that would have increased estate tax exemption levels immediately to $3 million ($6 million for couples), and again to $3.5 million ($7 million for couples) after 2009.

Independent Sector sent a letter to key House members urging them to vote against full repeal and for a reasonable compromise that reforms the estate tax. IS is opposed to permanent repeal of the estate tax because it will drastically reduce giving to charitable organizations.

On the other side of the Capitol, Senator Charles Schumer (D-NY) is leading Democratic efforts to negotiate a bi-partisan compromise bill. Should a compromise not be reached, senators supporting full estate tax repeal would need 60 votes to end debate and call for a vote.

Opposing senators would need 41 votes to keep the legislation from coming to a vote, effectively defeating full repeal.

State legislators are also grappling with estate taxes, since many state laws for collecting these taxes are based on the federal law. Last week, Washington state passed a new estate tax law that will apply to estates of more than $1.5 million in 2005, and more than $2 million in 2006.

The new law is expected to generate $140 million in revenues for the state over the next two years. Family farms are exempt from the tax.