Estate Tax Reform Sought As Part Of Tax Cut Package

Grassley, meanwhile, said in a memo released to reporters Sept. 13 that the inability to extend the expired tax cuts before Congress recesses to campaign for re-election could, at best, create administrative problems for the Internal Revenue Service or, at worst, cause some taxpayers to miss out on tax benefits they are entitled to. The tax extenders were left in limbo when the Senate in late July failed to stop debate on a so-called "trifecta" package.

Besides extending the tax cuts, the bill would have increased the minimum wage and made permanent an estate tax cut package that would cost an estimated 80% of the cost of total repeal. The measure failed by 3 votes, four after Sen. William Frist, R-Tenn., a prime supporter of the expensive tax cut package, changed his vote so as to give him the flexibility to seek a re-vote on the bill. The package was devised at Sen. Frist's request by Rep. Thomas.

The "extenders" package includes provisions to extend and expand the research and development tax credit and other business tax benefits, and tax cuts for individuals, including the state sales tax deduction, tuition deduction and deduction for teachers' out-of-pocket classroom expenses.

Frist had told reporters he would not bring the trifecta legislation to the floor this month if a Republican working group couldn't sweeten the legislation to gain the three additional votes for passage.

"If not, we'll not bring it back up," he said. "We all know politics is playing a role in all of this. The closer we get to the election, the more of a challenge it will be."

Frist charged that Democrats are "obstructing" Republicans from passing the bill.

But Sen. Harry Reid, D-Nev., Democratic minority leader, said in a statement later that, "All of the items that we need to pass, such as the state and local sales tax deduction, could get done by the Senate in two minutes if the Republicans would simply give up holding them hostage to their desire to provide billions of dollars of tax cuts to the wealthiest 8,100 families in our country."