WASHINGTON -- The previously uncommitted Senate Republican leadership said last week it will consider an estate tax reform bill before the end of the year in the wake of the House's overwhelming vote earlier this month to phase out the tax over the next 10 years.
"If anybody had said we would have this much momentum going for repeal of the estate tax a year and a half ago, they would be clairvoyant," said John Motley, senior vice president of government and public affairs at the Food Marketing Institute, a member of the Americans Against Unfair Family Taxation.
The House voted 279 to 136 earlier this month to repeal the estate tax, a veto-proof margin that attracted 65 Democrats in favor of the bill on top of the 214-Republican vote block. The bipartisan support and vote tally has caught the attention of Senate leadership, which hadn't yet signaled it would bring the issue up this year.
Senate Majority Leader Trent Lott (R., Miss.) told reporters last week the Senate would consider estate tax legislation by the end of the year.
"We are going to look at the best way to consider that in the Senate," Lott said, adding that an estate tax bill would be part of a larger tax cut package.
Kevin Burke, vice president for government relations at Food Distributors International, said a strong proponent of repeal in the Senate, Majority Whip Don Nickles (R., Okla.), will help to keep the issue on the agenda.
"Considering the size of the House vote, the Senate will consider it this year," Burke said, who added that he's not ruling out a Clinton compromise should a bill emerge from Congress. "It's my understanding the White House is interested in compromise. They realize this issue has traction."
But moving any tax bill through the Senate is problematic. Unlike in the House, senators can offer a limitless number of amendments that can be used as tactics to bog down an underlying bill. Despite the strong Democratic support in the House, not all Democrats -- including some in the Senate and President Clinton who is threatening a veto -- are in favor of repealing the tax.
The estate tax repeal is also vying for passage with other popular tax-cut measures. Federal budget constraints won't allow for all the proposals, a list that includes items reducing taxes for married couples and small businesses, allowing for tax-free college education accounts, repealing telephone excise taxes and restructuring pension laws.
However, the estate tax, characterized by critics as a family business killer, has a lot of public support going for it, thanks to a massive lobbying effort on the part of supermarket officials, farmers and others. Under the House-passed bill the top estate tax rate of 55% would be gradually phased out over 10 years.
Prior to the bill's passage in the House, the Americans Against Unfair Family Taxation, one of several coalitions lobbying the issue, raised $80,000 to buy radio advertising in 27 congressional districts to pressure voters to contact lawmakers on the issue. Tim Hammonds, president and chief executive officer of FMI, is a co-chair of AAUFT. FMI alone contributed $25,000 to the lobbying effort, Motley said, citing family-owned supermarket chains like Wegmans and Schnucks as examples of companies who would benefit from a change in the estate tax. The FDI contributed about $20,000, Burke said.
Coalition members will now apply similar constituent pressure on senators, as well as presidential candidates, with plans to spend upward of $400,000 for estate-tax repeal radio spots.
"What we're trying to do is raise the issue to a level where it's talked about in key Senate races and in presidential races," Motley said. In the likely event the estate tax repeal isn't passed by Congress or doesn't survive a presidential veto, Motley said supporters are angling for Republican presidential candidate George Bush to be elected, since he favors repeal.
Added FDI's Burke, "Realistically, the only way we can get estate tax repeal is if we have another occupant in the White House," meaning George W. Bush.
The National Grocers Association, another organization that has made estate-tax repeal a priority, also plans on leveraging votes. "This is an election year and all family business owners need to make their view on this issue known to members of both parties in the executive and legislative branches," said Thomas Zaucha, NGA president and CEO, in a statement.
"It becomes increasingly clear that the federal estate tax has literally taxed the family business right out of the family," Zaucha said.