In a 269-156 vote on June 22, the House passed compromise legislation "reforming" the federal estate tax system at a cost far exceeding the exemption levels supported by the insurance industry.
The House action was taken despite passionate Democratic opposition and parliamentary confusion that delayed the vote for several hours.
During the debate, Rep. Jim McDermott, D-Wash., noted that "scarcely a dozen" House members were actually in the chamber. He said the rest were seeing "not the House of Representatives but the theater of the absurd." Many were watching the debate on television from their offices.
He noted that the estate tax was started by a "public-spirited Republican," Teddy Roosevelt. "It is used as way to finance the things that we think we ought to do.
"You talk about the calls you receive from you district. Bill Gates called me and he said 'don't vote for estate tax repeal.'"
But Rep. Bill Thomas, R-Calif., chairman of the House Ways and Means Committee and primary author of the bill, said the call was misplaced. "We are not voting to repeal the death tax," he said. "We are producing a compromise which will be passed by this House and move to the other chamber."
Thomas said it passes "the goldilocks test." That means, he said, "For some it's too hot; for some it's too cold. It sounds to me like we've got a compromise that might have a chance at being passed by the U.S. Senate."
Rep. Roy Blunt, R-Mo., the majority whip, noted, "I've never thought that a trip to the undertaker should necessitate a trip to the IRS."
And, in a comment prompted by an advertising campaign prepared by the Coalition for America's Priorities, a group a source says was financed by the Association for Advanced Life Underwriting, Falls Church, Va., Rep. Richard Neal, D-Mass., said the bill should be called "the Paris Hilton Tax Relief Act"–not Baron Hilton, but Paris. The mention of Hilton is a reference to the ad campaign.
"She will be in great spirits this evening when she finds out that the Republican party has come to her aid again. This Congress has bent over backward to help the richest in this country," Neal said. "Is there no end to this?"
The original House bill, introduced on June 19, would have cost $280 billion in federal revenues over 10 years, according to Joint Committee on Taxation Estimates. The bill, H.R. 5638, is called "the Permanent Estate Tax Relief Act of 2006."
A compromise supported by Senate Republicans would have cost $275 billion over 10 years.
But the cost of the House bill was increased through an amendment that indexed the threshold levels to inflation, adding an additional $4 billion to the price-tag. The amendment indexes the $5 million per person exemption to inflation.
The House action sets up another vote in the Senate on the issue, where 60 votes are needed to limit debate. The vote could possibly be as early as June 22.
However, even defeat of the so-called cloture motion in the Senate is unlikely to put the issue, a critical one for the insurance industry, to rest.
Industry lobbyists and congressional staffers say that Sen.William Frist, R-Tenn., Senate majority leader, is considering a number of other approaches to get a reform proposal Senate Republicans can support through the Congress this year if the bill passed in the House on June 22 fails to pass muster in the Senate.
These include attaching the bill to must-do pension legislation, and even adding a provision being pushed by Democrats that would raise the minimum wage gradually to $7.25 in three steps.
In a note to investors, Joe Lieber of Washington Analysis said the bill "faces an uphill battle" for Senate passage.
