Congressional Republicans failed Thursday to override President Clintons veto of a bill that would have eliminated the federal estate and gift tax, also known as the "death tax."
Republicans said they were eager to take the issue into the presidential campaign, according to a report in The New York Times. The Republicans believed the issue would help put Republican presidential candidate George W. Bush in the White House by attracting support from small-business owners, farmers, entrepreneurs and other voters who object to having part of their wealth taxed when they pass it on to their heirs.
It would have taken a two-thirds vote in both houses of Congress to override the veto. Supporters of the bill in the House mustered only 274 of the needed 288 votes.
"This is a misguided bill that provides a huge tax cut to the most well-off Americans at the expense of working families," said Clinton in a statement after the vote. "It is a key ingredient of a Republican tax plan that would leave nothing for Social Security, Medicare, education or a voluntary, affordable prescription drug benefit."
Representative Jennifer Dunn (R-Wash.) called the estate tax "immoral, unfair, and economically unsound."
"We mourn today for family-owned construction companies as death tax relief is dead for the year," said Associated General Contractors of America Executive Vice President and Chief Executive Officer Stephen E. Sandherr. "Family-owned construction companies will continue to live in fear of a tax that can take away over half of their company assets. The financial and legal acrobatics our members perform in preparation for this onerous tax continues to rob them of precious capital that could be better used for business growth."
Under the current estate tax, estates of $675,000 or more are subject to a graduated tax with a top rate of 55%. The exemption is already scheduled to rise to $1 million by 2006. Family-owned businesses and farms have a special exemption up to $1.3 million, according to the New York Times report. With the exemptions, only about 48,000 estates will be affected by the tax this year.
The bill passed by Congress and vetoed by Clinton would have phased out the estate tax over the next 10 years, with much of the tax disappearing only at the end of that period.
A Democratic alternative would immediately raise the exemption for family-owned farms and businesses to $2 million per person, or $4 million per couple.