Dem Senators Assailed by Liberal Group for Tax Stance

July 7, 2008 - 7:31 PM

(CNSNews.com) - A liberal group is pressuring four Democratic senators to vote against a series of reductions in the estate tax. The Campaign for America's Future asks in one of its new print ads: "Will Democrats Stand for the Common Good or Blanche for the Special Interests?" a reference to Arkansas Sen. Blanche Lincoln, one of the four Democrats targeted.

"Lincoln and other estate tax opponents, who are trying to abolish the levy even on the super-rich, like to repeat sob stories about families that have to sell their small business or farm to pay Uncle Sam," wrote Jonathan Chait in the advertisement. "But critics never talk about the handful of massively wealthy families who have bankrolled the anti-estate tax campaign."

Lincoln's Arkansas colleague Mark Pryor and Washington State Sens. Patty Murray and Maria Cantwell are also targeted in the ads sponsored by the Campaign for America's Future (CAF) for their previous support of permanent estate tax reductions.

The bill in question -- The Permanent Estate Tax Relief Act of 2006 - would establish a permanent $5 million per person exemption from the estate tax, effective Jan. 1, 2010, when the current estate tax relief law expires. It would also set the tax rate for estates valued between $5 million and $25 million at 15 percent, which is also the current capital gains tax rate. Estates worth more than $25 million would be taxed at 30 percent, twice the capital gains rate.

Unless Congress and the president act before the current law expires, the estate tax exemption will drop to $1 million per person in 2011 and the maximum estate tax rate will increase to 55 percent.

The legislation will not come up for a vote in the Senate before the July 4 congressional recess, but supporters of the tax cut have momentum. The House on June 22 easily passed the measure 269 to 156.

Senate Majority Leader Bill Frist (R-Tenn.), in a statement released Tuesday, praised the House for making "tremendous progress last week toward achieving a permanent solution to the death tax," a reference to the estate tax's nickname.

Frist added that it is now up to the Senate "to decide whether it can improve upon the House bill or whether this is the bill that should be sent to the President for his signature."

"Everyone should be clear," Frist stated. "The Senate will vote on a permanent reduction to this tax -- a tax that destroys small businesses and family farms."

During a speech on the Senate floor on June 7, Lincoln said a non-partisan decision was needed in Congress to help family-owned businesses and farms, which she added, spend too much money on estate planning and taxes rather than on expanding their businesses.

Lincoln claimed that because she grew up on a seventh generation Arkansas farm she has "a little bit of a different perspective from some of my Democratic colleagues" opposed to the estate tax reductions.
"Outright repeal of the estate tax for family-owned businesses and farms has been a goal of mine since I entered Congress 14 years ago," Lincoln said. On that point, Lincoln now differs with Pryor, Murray and Cantwell, all of whom voted against a permanent repeal of the estate tax last month. The effort was defeated in a 57 to 41 vote.

Grover Norquist, president of Americans for Tax Reform, criticized Pryor for siding "with the likes of liberal Senators Harry Reid and Ted Kennedy rather than his constituents back in Arkansas."

"This is a sad day for all small businesses, farmers, and ranch owners, and most important the Arkansas voters who were betrayed by [Pryor's] vote," said Norquist.

Senate liberals and groups like CAF say the positions of all Lincoln, Pryor, Murray and Cantwell are out of line with the party's agenda. According to Chait, there will be "no free passes on this one." He criticized Lincoln for urging more federal funding for anti-hunger programs on the same day she was advocating for estate tax changes. Lincoln's "vision of government is incoherent," Chait said.

The Joint Committee on Taxation has estimated that the estate tax reductions contained in the House bill would cost the federal government $283 million in revenue between the fiscal years 2006-2016; critics of the bill claim that this is the worst time to starve the government of money when the federal deficit is so high.

"Everyday Americans will end up paying for this massive tax break through higher taxes, higher interest rates, higher college costs and much more," Toby Chaudhuri, communications director for CAF, told Cybercast News Service.

As of March 2005, 85 percent of Americans polled in Arkansas, Colorado, Indiana, Maine, North Dakota, and South Dakota were in favor of eliminating or reducing the estate tax, according to a poll conducted by the Policy and Taxation Group.

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