Senate Republicans on Wednesday said that a repeal of the federal estate tax must be a key component of any tax reform proposal, setting up a showdown with President Obama, who hopes to raise the levy to help reduce the deficit.
Senate Minority Leader Mitch McConnell, R-Ky., and Vice President Joe Biden negotiated in January to make permanent the current estate tax parameters as part of the fiscal cliff deal. That set the rate at 40 percent on the value of taxable estates valued at $5 million or more.
But Obama put the tax back on the negotiating table with a budget proposal that would raise the estate tax to 45 percent on estates worth $3.5 million or more. With lawmakers now getting ready to debate changes to the nation's tax code, McConnell and Senate Republicans renewed their call to repeal the so-called "death tax."
"I always thought the death tax was the government's final outrage," McConnell said. "That you had to visit the undertaker and the tax man on the same day."
Republicans in the House have already begun working on tax reform, hoping to produce results by the end of the year.
Sen. John Thune, R-S.D., said Republicans are hoping that Democrats will support the repeal, despite Obama's wishes. He added that the goal is to offset the lost revenue, estimated at about $20 billion a year.
"It's not inconsequential, but one-half of 1 percent of federal spending doesn't get you very far," Thune said.
steve contorno Congressional Correspondent