WASHINGTON -- The Senate last week dashed supermarket industry hopes of Congress repealing the estate tax, but supporters vowed to keep bringing the issue back until it passes.
Although a majority of senators voted for repeal, Senate rules on budget issues require a minimum of 60 votes for passage. The Democratic-controlled Senate voted 54 to 44 to reject repeal.
"The question now is whether repeal will become a campaign issue and will it be used against those Democrats who voted against it but who indicated support for it in the past," said David French, vice president of government affairs, Food Distributors International, Falls Church, Va.
Forty-one Democrats and two Republicans voted against repeal. The two GOP members, John McCain (Ariz.) and Lincoln Chafee (R.I.), are not up for re-election in the fall. Voting in favor of repeal were 45 Republicans and nine Democrats. Two pro-repeal GOP senators, Jesse Helms (N.C.) and Michael Crapo (Idaho), missed the vote. However, even if they had voted, the bill would still have been four votes shy of passing.
Defeat was a blow to food companies, a sector often cited by repeal proponents for family-owned businesses being hit hard by the current inheritance tax system, in place since 1916.
"The Senate's failure ... to make estate tax repeal permanent stymies family businesses from making plans for growth, job creation and investments in new technologies," said Tim Hammonds, president and chief executive officer of the Food Marketing Institute here and chairman of the anti-estate tax coalition, Americans Against Unfair Family Taxation.
After the defeat, lawmakers in support of repeal said it's just a matter of time before the measure is raised again in Congress and it passes.
However, even if Republicans were able to regain control of the Senate after the November elections, the difference in the number of seats held by each party would likely be as narrow as the current 51-49 split, so garnering the 60 votes for passage would be a challenge, observers say.
But even before the election, estate tax foes could have another chance to pass the repeal. The Senate rule requiring 60 votes for passage expires Oct. 1, and it's possible the rule won't be renewed while Congress is still in session. If repeal supporters are successful at forcing Senate Majority Leader Tom Daschle (D-S.D.) to bring the measure up, the bill could pass by a simple majority.
"Sen. Gramm [R-Texas, a sponsor of the Senate repeal bill] has indicated he's not going to stop his efforts," said Tom Wenning, vice president and general counsel, National Grocers Association, Reston, Va. NGA is looking at last week's defeat as "just one more step in the legislative process," he said.
Repeal advocates are still energized for their cause and want to convince fence-sitting Democrats to kill the tax. "Certainly this will be an issue that carries into the election," said Wenning.