WASHINGTON – Senate Republican leader Bill Frist asked House leaders for help reducing taxes on inherited estates, conceding that the GOP cannot eliminate them during this election year.
"I understand we are not going to get total repeal this Congress," Frist, R-Tenn., told reporters Friday.
Frist promised to hold a vote before July 4 if House GOP leaders pass a bill that changes a quirky law erasing the tax in 2010 and reviving it a year later. The schedule would put the tax cut, a favorite of many GOP voters, back on the agenda before an election with control of Congress at stake.
House GOP leaders are actively considering the request, a senior aide said.
The House has repeatedly passed bills eliminating taxes on inherited estates after 2010. A Senate effort last week to consider abolishing the tax fell short of the votes needed to overcome objections from most Democrats and a pair of Republicans.
Sen. Jon Kyl, R-Ariz., knowing Republicans did not have enough support to abolish the tax, offered a compromise, but he failed to attract enough support from Democrats interested in revamping the law.
Kyl had suggested increasing the exemption to $5 million per person or $10 million per couple and taxing most estates at rates equal to capital gains. His proposal would have taxed estates over $30 million at 30 percent.
Senate Democrats have been discussing other ideas for restructuring the tax.
Under President Bush's first tax cut, the estate tax shrinks through the decade and disappears in 2010. The temporary law lapses after that year, and the estate tax reverts to its older and higher rates.
This year, $2 million of a person's estate, or $4 million of a couple's, is exempt from taxation. The rest can be taxed at rates as high as 46 percent. By 2009, the exemption will increase to $3.5 million per person, or $7 million per couple, and the top tax rate will drop to 45 percent.
Frist said that law is "just crazy" and said lawmakers need to make permanent changes to the tax.
Frist also said he encouraged House Speaker Dennis Hastert, R-Ill., to attach other "attractive" tax provisions. Lawmakers have not yet extended a number of tax breaks that expired last year, including a research and development credit for businesses.