WASHINGTON - Business groups, including automobile dealer associations, scored a big victory when President Clinton and congressional leaders included the hated estate tax in their monumental agreement to cut taxes and balance the budget by 2002.
The estate tax is hot, having surpassed a proposed cut in the capital gains tax as the most-talked-about way government could help business.
The anti-tax groups are mindful that it is too early to celebrate. Much work remains to be done before the 'death tax' is no longer a serious threat to family-owned businesses.
But business groups got the estate tax to the front burner by relabeling the levy a 'death tax.' They also characterized the tax as a threat to family farms, always a politically popular cause. Depending on the size of the estate, the tax has a top rate of 55 percent, plus a 5 percent surcharge for assets above $10 million.
Nearly two dozen estate tax reform bills have been introduced in Congress this year. They range from outright repeal, which appears highly unlikely, to modest adjustments.
The budget deal, made early this month, represented only the broad outlines of a budget plan. The details remain to be hashed out in congressional committees.
A major immediate hurdle is the fact that under the terms of the budget deal, tax cuts of all kinds must not cost the treasury more than $135 billion over five years.
Within that limit, there would be room in the budget package for only about $7 billion in estate tax reduction, according to an independent organization, Tax Analysts. However, most estimates for the kind of estate tax overhaul preferred by the business community run to at least $18 billion.
'Any relief will be an improvement over current law,' said Scott Lane, vice president for government relations of the American International Automobile Dealers Association.
Lane indicated that AIADA would start a renewed lobbying effort to get the best possible estate tax bill, starting with the group's annual convention two weeks ago, when hundreds of automobile dealers visited Capitol Hill. He said dealers have important stories to tell.
Lane remains optimistic, he said, because Republican congressional leaders and members of tax-writing committees are committed to estate tax change, and there is bipartisan support among the rank and file in Congress.
Business groups are focusing on bills that would not only raise the individual exemption - currently equal to $600,000 per individual - but also create a separate exemption for family-owned enterprises.
One business-backed version, introduced by Rep. Jim McCrery, R-La., would exempt the first $1.5 million in value of a family business and tax just half the next $8.5 million.
There is opposition. Critics say the measures would be another way to give tax breaks to the least needy of society, and could lead to sharp reductions in gifts to charities. In theory, lower taxes would remove some incentive to make gifts before death or in a will.
Lane and AIADA Chairman Charles Smith, who runs six Texas dealerships, take some comfort from the fact that initial writing of the tax package will be done by House Ways and Means Chairman Bill Archer, R-Texas. Lane called him 'someone we feel we can work with.'