House approves GOP bill to eliminate estate tax

By Ian Christopher McCaleb
CNN Washington Bureau

WASHINGTON (CNN) -- The House passed a Republican-sponsored bill Wednesday that would eliminate the estate tax -- thus completing part three of its three-pronged approach to President Bush's tax relief aspirations.

The measure, which would completely roll back the estate tax by 2011, passed 274-154 at midafternoon. That closed a short legislative week for House, which will not meet for legislative business again until members complete a two-week Easter break.

Fifty-eight Democrats voted with the majority Republicans. Three Republicans voted against the bill.

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House members debated the proposal vigorously through the early parts of the day.

Republicans in the House refer to the estate tax as the "death tax," with many insisting the government has unfairly taxed the very act of dying for too long.

The bill was the third setting in the House's tax relief triple crown. Last month, the House passed a bill that would lower 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 bill considered Wednesday would dismantle an estate tax regime that has been in place for 85 years.

At present, estates with assessed values of more than $675,000 are subject to the levy. If the current law is not supplanted, the exemption threshold will be raised to $1 million in 2006.

Many members of both parties agree the tax puts undue strains on family farms and small businesses. What they do not agree on is how to solve the problem.

The GOP bill would likely cost the government $185.5 billion in tax receipts over 10 years, but its effects would probably not be felt until the very end of that time.

The legislation, 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.

Republicans agreed for the most part with that assertion, saying too many other things needed to be taken care of first.

"My Democratic colleagues are right," said Rep. Kevin Brady, R-Texas. "It starts off very, very slow, but it grows as we pay down some of the debt and our surpluses grow."

"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 death."

The Bush administration and the Republicans in the House are hoping to make up for the tax income lost to the government from their sweeping cuts by pulling funds from a budget surplus 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 should not 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."

"They're calling it the 'Republican I hope you live for 10 years' bill," said Rep. Charles Rangel, D-New York, the ranking Democrat on the Ways and Means Committee.

Republicans argued that they would eliminate the tax and that a Democratic substitute bill raising the $675,000 threshold to $2 million left the tax intact.

"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."

"Under our bill, the relief is now," Rangel said.

His arguments did not take with the House rank and file, however. The Democratic substitute fell by a vote of 201-227.

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