Legislation setting a 35 percent estate tax rate with a $5 million exemption is now law -- at least for two years . . ....Read more
Estate Tax Reduction Dead for Now After Senate Rejects Bill
- August 4th, 2006
The U.S. Senate has rejected a bill that combined a rise in the minimum wage with a sharp reduction in the estate tax. The reduction or elimination of the estate tax, a long-cherished Republican goal, now appears to be a dead issue at least until after the November election.
The Republican-sponsored measure, which passed the House, had been assailed by Democrats as a cynical election-year ploy to take away a key Democratic campaign issue '“ the minimum wage '“ while advancing a substantial cut in the estate tax. Republican lawmakers fearful of losing seats in November, had been looking for ways to pass the estate tax bill before then.
The latest strategy married a tax exemption on the first $5 million of an individual's estate and $10 million of a couple's with a $2.10 increase in the minimum wage over three years. But for many Senate Democrats, reports the Boston Globe, "their desire for the first increase in nine years in the $5.15 federal minimum wage was outweighed by their abhorrence of a tax break for the rich they said could have cost the federal treasury $753 billion over 10 years."
A vote to cut off debate and send the bill to a floor vote passed by 56-42, short of the necessary 60 votes.
But Congress was able to come away from rancorous spring and summer sessions with at least one legislative success. While rejecting the estate tax-minimum wage bill, the Senate approved and sent to the White House legislation to strengthen pension plans that cover 44 million people. Private pension plans are estimated to be underfunded by more than $450 billion, while the federal Pension Benefit Guaranty Corporation, which insures pension plans, currently faces a $22.8-billion deficit. The legislation, which passed the Senate 93-5, "requires most companies to fully fund their pension liabilities within seven years, in part by making an estimated 30,000 companies pay more into their plans," reports the Los Angeles Times, The bill will also permit companies to automatically enroll employees in a 401(k) plan.
"This bill says to millions of Americans who fear their pensions will disappear that help is on the way," said Senator Edward Kennedy (D-MA).
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