DEATH TAX REPEAL STILL UNDER CONSIDERATION

By: Todd Shields House To Pass Measure, But Senate Remains Divided


WASHINGTON - The U.S. House of Representatives is all but certain to vote to eliminate the estate tax. To ensure the case for repeal is made well, the chamber's tax-writing committee last week heard from a number of estate-tax opponents, including a farmer, an owner of a small business, and a publisher of a newspaper.

Frank A. Blethen, publisher of The Seattle Times and a longtime campaigner against the tax, told the Ways and Means Committee the tax has driven newspaper ownership away from independents and families and into the hands of "large, absentee, public-company conglomerates."

Blethen spoke on his own behalf, as one of a parade of witnesses hostile to the tax to appear in recent weeks before financial committees in the Republican-dominated House and the divided Senate.

The testimony in each chamber was similar: Small-business owners chafe under the expense ($200,000 yearly, said Blethen) of planning to reduce the estate tax, and they fear heirs may be forced to sell their bequest to meet tax bills. But the legislative outlook differs.

In the House, sponsors of a bill to repeal the estate tax expect a vote by the Ways and Means Committee this week and a vote by the full House the following week. Passage seems assured. The leading measure, which is backed by the powerful chairman of the Ways and Means Committee, Bill Thomas, R-Calif., already has 222 co-sponsors, enough to ensure its passage in the 435-member chamber.

That would move the legislative action to less certain ground in the Senate. It is not expected to vote on broad budgetary guidelines until next month, leaving until May or later votes on specific proposals such as estate-tax or marriage-penalty relief. Several of its 50 Democrats, who each have considerable power to delay legislation, have indicated they oppose repeal and prefer increasing the size of the exemption from the tax. Currently the first $675,000 is exempt, an amount due to climb to $1 million.

Blethen told the House panel Wednesday that increasing the exemption level would offer business owners limited relief, since even small dailies are worth $10 million and larger newspapers are worth much more.

Repeal opponents, braced by the recent emergence of a millionaires' group that wants to retain the tax, are planning to escalate their lobbying in coming weeks. "I think momentum has shifted," said Gary Bass, executive director of OMB Watch, a private, nonprofit, public-interest group that wants to retain the tax. "Whereas it was a slam-dunk for repeal a month ago, I don't see that now."

Meanwhile, President Bush used a recent Washington gathering of community newspaper publishers to make the case for his budget and tax package.

Bush told the Government Affairs Conference of the National Newspaper Association (NNA) that he favors eliminating the estate tax. "It is unfair to tax a person's personal assets twice," Bush said to applause from more than 200 NNA members, mainly publishers.



Todd Shields (tshields@editorandpublisher.com) is the Washington editor for E&P.



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