House Proposes Eliminating the 'Death Tax'

In voting in favor of the "Death Tax Repeal Permanency Act of 2003," the House unequivocally shut down an alternative bill that favored a larger exemption, but didn't advocate a permanent repeal. North Dakota Democrat Earl Pomeroy had sponsored a bill that would have made estates less than $3 million wholly exempt from tax immediately.

That sort of compromise is likely to be revisited in the Senate. A permanent repeal of the estate tax requires 60 votes in the Senate, and the Republicans just don't have the numbers. (They didn't have it in 2001, either, which is why the sunset provision had to be attached. Tax law that affects the budget for more than 10 years needs 60 votes in the Senate to pass; hence, the 10-year sunset.)

The estate tax issue will undoubtedly raise hackles in the Senate, even among Republicans, such as Arizona's John McCain, Maine's Olympia Snowe and Rhode Island's Lincoln Chaffee, all of whom bristled at the 2003 tax cuts. "Once they reach a stalemate in the Senate, they'll have to think about reform options," Bass says. "But right now the Republicans aren't thinking about reform or compromise."

Deficit hawks in the Senate may not make compromise easy, either. "The revenue loss is not insignificant," says Wayne Zell, a tax attorney with Mintz Levin in Reston, Va. "And with today's ever-growing deficit, it's difficult to justify a tax imposed on a very small percentage of the population -- especially since that small percentage represents those with the greatest wealth."