Schumer to seek a deal on death tax

By Alexander Bolton
April 6, 2005
The Hill

Senate Minority Leader Harry Reid (D-Nev.) has tapped Sen. Chuck Schumer (D-N.Y.), the chairman of the Democratic Senatorial Campaign Committee, to handle negotiations to repeal or restructure the estate tax, according to Senate sources.

The appointment appears to increase significantly the chances of reaching a deal on what critics call the death tax and may inoculate Democrats from future political attacks on what has been a tough issue for them in rural and swing states.

Schumer has said that he supports a repeal of the tax on all family-owned businesses passed from one generation to the next, a central demand of small-business proponents in the Senate and on K Street. Schumer will work closely with Reid’s leadership staff.

A lobbyist with strong GOP ties who works on the issue said the choice of Schumer to spearhead Democratic negotiations over the estate or death tax signaled a greatly increased chance of the parties’ reaching agreement this year.

“The significance of Schumer is as follows: He is head of Democratic Senatorial Campaign Campaign (DSCC), he’s from a liberal state with a liberal voting record and he is now the principle cheerleader of getting rid of the death tax on family businesses.”

“It would have been something else if Reid chose [Sen.] Ben Nelson [D-Neb.], who’s from a rural state and conservative,” said the lobbyist, who concluded that the selection of Schumer “indicates to me that Senate Democrats get it when it comes to lifting the death taxes off businesses.
A Schumer aide disputed that characterization, arguing that Schumer is moderate on fiscal issues, even though he has at times led Democratic opposition on abortion restrictions and on federal judicial appointments.

The aide said that Schumer’s centrist credentials made it more likely a deal could be struck with Republicans.

“You’re more likely to get a deal if you have moderates talking,” the aide said.

The estate or death tax has been a nettlesome issue politically for Democrats in rural and conservative states. The national and local Republican parties in South Dakota and Georgia used the issue against former Sens. Tom Daschle (D-S.D.) and Max Cleland (D-Ga.), who lost their bids for reelection in 2002 and 2004, respectively.

Several Democratic senators from rural and swing states are facing challenging races in 2006. They include Nelson in Nebraska, Bill Nelson in Florida and Maria Cantwell in Washington.

Reaching a deal with Republicans on a tax exemption for family-owned businesses of any side could take the issue off the table in 2006, which may be why Schumer, the DSCC chairman, is leading the effort. He is also a new member of the Senate Finance Committee.

Jim Manley, a spokesman for Reid, declined to comment.

Schumer will negotiate primarily with Sen. Jon Kyl (R-Ariz.), chairman of the Senate Republican Policy Committee, who is handling the issue for the GOP.

Sen. Max Baucus (D-Mont.), ranking Democrat on the Finance Committee, said many Democrats would support a deal on the tax.

“If it happens, I would be on board,” said Baucus, who added that many of his party colleagues share his view. “There’s a good number when all is said and done.”

Baucus said agreement between Republicans and Democrats on the estate or death tax is possible.

“It’s a high priority, but so much is a high priority around here,” he said, adding that “an awful lot of people are uncertain” about how to plan their estates because the tax is scheduled to increase when its phased-in repeal, included in the president’s tax-cut package of 2001, expires.

“We have to address that uncertainty,” he said. He predicted that legislation addressing the tax would have to be included in a larger “package of some kind.”

Senate lawmakers have slated room for nearly $135 billion dollars in tax cuts in the budget resolution passed by the chamber before the Easter recess. The amount is nearly $30 billion more than what House Republicans set aside for tax cuts in their budget.

Sen. Blanche Lincoln (Ark.), a centrist Democratic member of the Finance Committee, said she did not share Baucus’s optimism about passing a deal on the tax.

“It’s going to be tough,” she said, noting other tax provisions for which lawmakers and assorted interests are pushing. “I just think there are a lot of other things.”
Lincoln acknowledged that few if any decisions appear to be made about what items to include in the tax package that is expected to hit the floor later this year.

“I don’t think we’re close to figuring out what that’s going to be,” she said.

Sen. Ben Nelson of Nebraska said he shared Schumer’s position for “all-out repeal” of the estate tax for family-owned businesses. He also said a number of Republicans who have pushed for a complete elimination of the estate tax have now signaled their willingness to compromise.

“I’ve had conversations with a number of Republicans who had been in favor of total repeal who are now in favor of other options,” he said.

Sen. Dick Durbin (Ill.), the Democratic whip, said that he too supports a repeal of estate taxes on all family-owned businesses. He said that Sen. Byron Dorgan (D-N.D.) had in past Congresses offered amendment shielding all such businesses from the tax and that it had enjoyed broad Democratic support.

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