Hoekstra Likes Estate Tax Repeal But Not Timeframe

May 28, 2002
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GRAND RAPIDS — Congressman Pete Hoekstra (R-Holland) is a bit sardonic about the estate tax repeal legislation that emerged from the House-Senate Conference Committee a week ago Saturday.

He told The Business Journal that, though he hasn’t had the chance to see the details, it’s his understanding that the measure immediately will raise the tax-excluded portion of an estate from $650,000 to $1 million.

“And I understand that the [tax] rate will come down a bit, too.”

But it will be 11 years, he added, before the estate tax actually is permanently repealed, and then only if Congress extends the current repeal measure every year or two.

“For the life of me, I can’t understand how this thing ever got in place, but on the Senate side, if you don’t repeal a tax by 60 votes, then you’ve got to keep approving the same thing every few years. The estate tax part of the tax bill didn’t get 60 votes in the Senate, so it’s got to come up for approval again and again and again.  Maybe it will be permanently repealed by the time for your great-great-grandkids to take full advantage of it.

He explained the measure will remain permanently vulnerable to repeal.

“That’s why every two or three years you’ve got the extension of the extension of the research and development tax credit for businesses.  The reason is we’ve never been able to get the 60 votes to make it a permanent change in the tax law.”

And, in his view, that’s unfortunate. He believes the estate tax is one of the federal mechanisms that has encouraged the tremendous pace of mergers and acquisitions concentrating more and more business power in fewer and fewer hands.

The problem, as he sees it, is that the post-World War II generation has been selling the firms it built as a way of keeping the Internal Revenue Service from standing at the front of the line of heirs.

And he thinks that over time the consolidation of corporate power is potentially devastating to towns the size of Grand Rapids.

“The day can come when you don’t have an real leaders left in town to serve on community boards and foundation boards.  You want to get something done, but the people who do those things are gone forever.”

Hoekstra said it's going to be some time before all the implications of the Senate transition to Democratic Party control makes make themselves clear in Washington.

But he told The Business Journal last week that he believes the Republicans in the House likely are going to be playing firewall against the Senate Democrats' desire to dramatically increase federal spending.

He also said the transition might actually work in favor of at least one proposal that's dear to him: a bill to prohibit federal prison industries from competing against West Michigan furniture manufacturers.

He said that's because Sen. Carl Levin (D-Mich.) repeatedly has introduced companion legislation in the Senate.

"Carl's with us on this," Hoekstra said, "he's always worked very closely with us. And now, of course, he's very senior in the Senate.

“And Debbie's with us on the issue, too" he added, referring to Sen. Deborah Stabenow (D-Mich).

"Now we’ve got to figure out where Tom Daschle is on this issue." Daschle (D-S.D.) is the new Senate majority leader who has the power to personally derail any 

Hoekstra said that prior to the Democratic take-over of the Senate, he and his supporters were concerned about whether Trent Lott, then the Senate Majority leader, even would let the measure get to the floor.

He said the problem was that Lott had a close friend working as a lobbyist with an interest in the federal prison industries program.

“We don’t have to worry about that any more,” he grinned.

Speaking of the control of the Senate, Hoekstra recommended that none of his supporters hold their breath in anticipation of Democratic Party crossovers returning the chamber of GOP control.

True, any Democrat taking such a step would bring the Senate Republicans back up to 50 votes to the Dems' 49, thus giving control to the GOP.

But Hoeskstra doubts that any Democrat would dare take such a step because events immediately could put the GOP right back in the minority anyway.

One such event would be the death of Sen. Strom Thurmond, (R-S.C.), who is 98 years old and in very frail health. Were he to die, the Democratic Party immediately would regain control of the Senate because South Carolina's governor, a Democrat, would appoint a Democrat to replace Sen. Thurmond.

But given that Thurmond survives, Hoekstra said the mid-term elections in 2002 have a a better-than-even chance of deepening Democratic control of the Senate. In that mid-term election — which usually goes against the party controlling the White House — only 14 Democrat senators will face re-election as opposed to 20 Republicans.

“So any Democrat like Zell Miller (D-Georgia) who’s looking at switching probably would say¸ ‘With Strom and 2002, I’m looking at moving from the majority into the minority sooner rather than later. Why would I make that move?”

In other comments he said:

The Chinese damaged the U.S. intelligence effort when it captured the Navy surveillance plane, but he doesn’t believe the damage is serious. The software was the most important part of the plane’s contents and he believes it was destroyed before the plane landed.

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