Backers of estate tax repeal talk of compromise

WASHINGTON — Some of the staunchest advocates of eliminating estate taxes said Wednesday they could accept, with some reservations, a compromise that stops short of complete repeal.

“It’s hard to get excited about it,” said Pat Toomey, president of the conservative Club for Growth. “I suppose, on balance, it’s better to have this than not to have it.”

The reduction under consideration, scheduled for House debate Thursday, rewrites estate tax rates in 2010 and beyond. It responds to a quirky and temporary law, part of President Bush’s first tax cut, that erases estate taxes in 2010 and revives them a year later.

The chairman of the House Ways and Means Committee recommended rewriting that law by exempting $5 million of an individual’s estate, and $10 million of a couple’s, from taxation beginning in 2010. Rep. Bill Thomas, R-Calif., would let a surviving spouse use any unused portion of an exemption left by a deceased spouse.

Under that plan, an estate worth up to $25 million would be taxed at capital gains rates, currently 15 percent and scheduled to increase to 20 percent in 2011. Estates worth $25 million or more would be taxed at twice capital gains, currently 30 percent and increasing to 40 percent.

Some farm and business advocates said they could accept the proposed estate reduction because it will make family financial planning easier.

“Our members would like something to happen this year,” said Pat Wolff, tax specialist at the American Farm Bureau Federation. “Now is the time to talk compromise if you want something to be done.”

The House’s most conservative Republicans agreed that some reduction in estate taxes was better than no reduction. Rep. Mike Pence, R-Ind., said if the proposal “moves a little bit in the direction you want to go, that’s progress.”

He and others worried that the Senate may not accept the House bill, but instead could use it as the starting point for further negotiations.