The United States Senate on June 12 rejected President Bush’s call to permanently eliminate the estate tax. The 54-44 vote in the Democratically controlled chamber was six votes short of the 60 needed for passage. The U.S. House of Representatives, dominated by Republicans, last week approved repeal in a 256-171 vote. Support by both houses of Congress was necessary. A new attempt to permanently eliminate the so-called “death tax” is unlikely this year.
The jewelry industry, led by Jewelers of America, and other business groups have long called for the tax’s permanent repeal, citing the financial burden it puts on preserving and transferring family businesses from one generation to the next. JA expressed regret at the Senate’s action.
“Jewelers of America supports making permanent the repeal of the estate tax, because so many of our members are family-owned small businesses,” says Matthew Runci, president and chief executive officer of Jewelers of America. “We will continue to work with our lobbyists in Washington on this and other issues of importance to retail jewelers.”
Congress last year approved phasing out the estate tax over 10 years, as part of President Bush’s $1.35 trillion tax cut package. However, those cuts end Dec. 31, 2010, allowing reinstatement of the estate tax in 2011. Bush has urged Congress to make permanent all the 2001-approved tax cuts, including the estate tax.
Senate Democrats contended permanent repeal of the estate tax would hurt a number of programs, including health care, education and Social Security and push the country deeper into debt. However, they offered two alternatives, both of which failed. One would have permanently exempted all but the largest estates (over $4 million for individuals, $7 million for couples). The other would have permanently exempted family-owned business and farms.
Republicans say the Senate vote will be a key element in their fall election campaign to regain control of Congress. Senate Democrats countered that voters will understand the vote as being “fiscally responsible.”