Dateline: 04/04/01 

The House of Representatives today gave its approval to the third element of President Bush's tax cut plan by passing a $192 billion bill phasing out estate taxes -- the so-called "death tax" -- by 2011.

By a vote of 274-154, Representatives passed H.R. 8 -- Death Tax Elimination Act. The Republican-sponsored bill won the support of 58 Democrats, while three Republicans voted no.

Currently, estates amounting to $675,000 or less are exempted from being taxed. The maximum exemption value increases to $700,000 in 2002, to $850,000 in 2004, to $950,000 in 2005 and $1 million by 2006. The bill passed by the House today maintains these already scheduled increases and slowly cuts the top 55 percent tax rate over a 10-year period.

Starting in 2002, the 55 percent rate would be cut to 53 percent and the present 5 percent surtax on estates over $10 million would be eliminated. The top tax rate would then be reduced annually until 2011, when it would be completely repealed.

Lawmakers earlier rejected a Democratic alternative bill that would have immediately increased the exemption limits to $2 million for an individual and $4 million for a couple.

Supporters of the Democratic alternative argued that the Republican-backed bill failed to disclose its actual cost in revenue. One estimate placed the bill's cost to the federal treasury at $662 billion in 10 years.

Prior to passing the $192 billion Death Tax Elimination tax cut, the House approved a $400 billion reduction to the marriage tax penalty and a $958 billion across-the-board tax rate reduction.

The Senate will not consider the Marriage Tax, Estate Tax and Tax Reduction Bills separately. Instead, the Senate will combine all three bills into an "omnibus" tax reconciliation bill to be considered at a later date.