Democrats' overhaul won't discard death tax
By: Administrative Account | Source: The Washington Times
October 16, 2007 9:08AM EST
October 16, 2007
By S.A. Miller - A reprieve from the so-called federal death tax isn't in the massive tax policy overhaul House Democrats will roll out in coming weeks, a top Ways and Means Committee aide said.
The death tax "hasn't been part of the discussions," the aide said of the closely guarded "mother" of all tax reform bills being written by committee Chairman Rep. Charles B. Rangel, New York Democrat.
House Speaker Nancy Pelosi, California Democrat, said her party has a plan that would only hit the super rich with the inheritance tax. But she didn't say when it would be introduced and she lamented the lost revenue, about $850 billion over the next 20 years.
"It's costly. I said everything we do is going to be paid for, one way or another," Mrs. Pelosi said after House Democrats last week rejected a Republican bid to eliminate the death tax. "Whatever we take up on our taxation [policy] will be about simplification. It will be about fairness. It will be about strengthening the middle class."
Republicans, eager to make taxes a defining issue in the next election, say government should not raise taxes on some to reduce taxes on others.
"The death tax is yet another issue that illustrates the difference between Republicans and Democrats," said House Minority Leader John A. Boehner, Ohio Republican. "We believe it is fundamentally un-American to tax our citizens upon their death, while Democrats appear to believe this form of double taxation is a fundamental right of the federal government."
The parties also clashed over taxing Internet commerce, with Democrats on the House Judiciary Committee last week rejecting a Republican bid to permanently ban Internet taxes.
A Democratic bill extending a moratorium on Internet taxes to 2011 is scheduled for a vote today.
The death tax will temporarily phase out in accordance with the Tax Relief Act of 2001, which eliminates it in 2010 but restores the tax in 2011 to snag 50 percent of inheritance of more than $1 million.
The death tax for 2007 is 46 percent of estates in excess of $2 million.
Rep. Kenny Hulshof, Missouri Republican, led the push to permanently repeal the tax last week by attaching the legislation to another measure. It was defeated 212-196 with 186 Republicans and 10 Democrats supporting the measure.
The House passed identical legislation to repeal the death tax in the last Congress by a 272-162 vote with 42 Democrats supporting it.
Mr. Rangel's tax-simplification bill, touted as the most sweeping tax code rewrite since 1986, is expected to redistribute up to $1 trillion through the tax system while avoiding the death tax.
The centerpiece likely will be the elimination of the alternative minimum tax, a nearly 40-year-old tax designed for some of the country's most wealthy clans that increasingly hits middle-income families.
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