by Mike Hall, Jun 8, 2006

The Paris Hiltons of the world and other heirs to the super-rich aren’t going to get a completely free ride. This morning, the U.S. Senate blocked a bill to permanently eliminate the multimillionaire estate tax.

The bill would have eliminated the estate tax, which applies only to estates worth $2 million ($4 million for couples) or more. But backers failed to win enough votes to end debate and bring the bill to a vote. Just a fraction of 1 percent of all estates are worth enough to be subject to the estate tax.

Already fed up with tax handouts to the rich from the Bush administration and his congressional allies, working families have been pelting their senators with e-mails and letters opposing the estate tax repeal.

President George W. Bush has pushed for and won larger exemptions and lower tax rates for moneyed estates in previous tax cut bills. Permanently eliminating the estate tax would have cost the government some $1 trillion in lost revenue in the first 10 years, according to government figures.

But the super-rich may not walk away empty-handed. Sen. Majority Leader Bill Frist (R-Tenn.)—the head Senate cheerleader for repealing the estate tax—has indicated he plans to bring a so-called “compromise” bill to a vote as soon as one is offered.

The “compromises” that have been discussed would further increase the value of estates exempt from the tax to perhaps as much as $10 million and slash the tax rate by as much as two-thirds. The loss in government revenue under the compromises could run as high as $840 billion—84 percent of the impact of full repeal—according to the Center on Budget and Policy Priorities.

The call to repeal the estate tax has not been bubbling up from the grassroots. It’s been a manufactured campaign by the Bush administration—which has never met a tax cut for the rich it didn’t love—and a group of 18 of the nation’s wealthiest families. Those families spent more than $500 million in lobbying expenses and advertising to eliminate the estate tax, according to a report by Public Citizen and United for a Fair Economy.

Permanent repeal of the estate tax, according to the two nonprofit groups, would save $71.6 billion for those already wealthy families—including the heirs of the Wal-Mart fortune. Even under the “84 percent” solution, that’s quite a chunk of change.

We will keep you posted on any compromise that rears it’s ugly head.

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