Senator Gives Estate Tax Repeal Bill ‘Zero’ Chance Of Success

by Mike Godfrey, Tax-News.com, Washington

05 September 2005

Sen. Charles Grassley (R - Iowa), Chairman of the Senate Finance Committee, has stated that there is virtually no chance that the Senate will back a full repeal of the estate tax when the chamber reconvenes to address the issue once again after the summer recess.

Senate Majority Leader Bill Frist (R - Tenn.) is planning a vote on H.R.8, which would repeal the estate tax beginning this year, and it could be one of the first bills on the Senate's legislative agenda during the September session, despite the more pressing issue of dealing with the aftermath of Hurricane Katrina, which has devastated the city of New Orleans and much of the Gulf Coast area.

However, it is widely acknowledged by lawmakers and analysts that Frist lacks the minimum 60 votes needed to prevent a filibuster, a point Grassley noted whilst speaking to reporters in his home state of Iowa last week.

"I would imagine we have 55 or 56 votes to repeal it, but it's not going to get done," commented Grassley, who went on to add that the chances of a permanent repeal of the tax are "zero".

Shortly before the Senate left for the August recess, it emerged that agreement had been reached on the "basic parameters" of an estate tax compromise entailing a lowering of the tax rate in combination with an increase in the estate tax threshold. According to Grassley, the boundaries of this compromise deal encompass an exemption of between $4 million and $6 million and a tax rate of between 15% and 35%.

Currently, the estate tax threshold is $1.5 million, which is set to rise to $3.5 million (and $7 million for couples) in 2009 under temporary tax measures passed in 2001. Meanwhile, rates are set to decline to 45% in 2009 before being repealed for one year. However, under the 2001 legislation, the tax will then be resurrected at the pre-2001 rate of 55%.

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