December 2000

Congresswoman Says Bipartisanship Is Instrumental to Meaningful Tax Relief

As with most contentious issues, cooler heads typically prevail and compromise smoothes ruffled feathers. However, with respect to federal tax relief legislation, the concept of putting aside one’s differences in the name of progress has been usurped by the “all-or-nothing” stance assumed by the Republican leadership, said Rep. Nita M. Lowey (D—N.Y.) at the NYSSCPA Estate Planning Committee’s annual dinner. The six-term congresswoman was the guest speaker at the event, which took place Nov. 15 at the Yale Club.

Lowey said that not only is the Republicans’ defiant approach fiscally irresponsible given the unpredictability of the future economy, it is misguided considering the slim margin between the two parties in Congress.

In making her case against the Republican leadership (specifically charging House Whip Tom DeLay

(R—Texas) and House Majority Leader Dick Armey (R—Texas), Lowey referred to this year’s failed attempts to enact estate tax and marriage tax relief legislation. In July, Congress passed a bill that would have gradually eliminated the estate tax over a 10-year period; President Clinton later vetoed the bill.

Lowey said she supports a reduction of the estate tax but remains adamantly opposed to a complete repeal of the “death” tax—a proposal she deems financially risky.

“I have always believed that we should be able to pass down more to our children and grandchildren without forcing them to incur a significant tax burden,” Lowey said. “But if we take a closer look at the effect of this repeal on the overall budget, it becomes clear that the price we would pay is too much.”

According to the congresswoman, the repeal would have resulted in a revenue loss of $50 bill1ion per year by 2011, jeopardizing federal programs and initiatives.

Lowey said she endorsed an alternative proposal that would have slashed the tax by 20 percent and abolished the five percent surcharge. Lowey said that, while the president vetoed the bill that would have gradually eliminated the estate tax, he told her personally that he too favored a 20 percent reduction in the tax and a significant expansion of the unified credit for small businesses and family farms.

“This plan gives immediate and real relief to all estates while maintaining a responsible and reasonable impact on the overall budget,” Lowey said. “I happen to know that a significant number of my colleagues on both sides of the House would accept a compromise like this over a full repeal if the leadership would allow it to be considered on the floor.”

Estate Planning Committee members appeared to agree with Lowey’s remarks.

“Nita Lowey is a very popular congresswoman and her speech showed why she is,” said Paul J. Weireter of American Express Tax & Business Services. “The hard-liners from either end are going to have to soften on certain positions or nothing will get passed.”

Public Relations Committee Chair Alan D. Kahn, past chair of the Estate Planning Committee, voiced a similar opinion.

“I thought the speech was exceptional,” Kahn said. “She really was a wonderful speaker who was truly sincere in every sense of the word. Everybody felt the same way.”

Lowey criticized the GOP’s proposal to provide marriage tax relief. Under the Republican plan, the standard deduction for married couples would have increased to twice that for individuals and the lowest tax brackets for married couples would have expanded.

She said the Republican plan did not adequately target working families, increasing the marriage bonus for 48 percent of couples that already pay less taxes than individuals and providing relief for the 11 percent of couples that experienced no adverse tax changes when they married. The net result of this proposal would have been detrimental to the budget.

Though the Democratic plan also would have nearly doubled the standard deduction for married couples, it would have called for further expansion of the lowest income tax brackets for married couples as well as the earned income tax credit. Additionally, it would have adjusted for the alternative minimum tax, ensuring that middle-class couples previously penalized by the marriage tax would still see relief.

The proposal, Lowey said, was more fiscally sound and fair to all taxpayers but failed on a party line vote. The remaining tax items being discussed in Congress will experience the same fate as the estate tax and marriage tax relief legislation unless both parties can reach an agreement. Consequently, Lowey concluded, the new Congress must recognize that achieving significant tax relief is dependent upon bipartisan compromise.