Bloomberg reports on business groups lobbying for a 35 percent death tax to prevent a return to the 55 percent tax rate at the end of the year. Business has long argued for eliminating the death tax altogether, but current political and budgetary realities make that an unrealistic goal at the moment.

A 35 percent rate “is really that sort of sweet spot of what’s acceptable to all sides,” said Dena Battle, director of tax policy for Washington-based National Association of Manufacturers. “We don’t want to see the tax go up to 55. We didn’t want to see the tax at 45.”

The longer Congress delays action, bringing a 55 percent tax closer to reality, the fewer reasons Democrats have to consider Kyl’s and Lincoln’s 35 percent alternative, said Jeff Shoaf, senior executive director for government affairs at Arlington, Virginia-based Associated General Contractors.

In a December 2009 column, Sen. Jon Kyl (R-AZ) explained the reasoning behind the language he and Sen. Blanche Lincoln (D-AR) have sponsored:

I have always believed that permanent repeal of the death tax represents the best policy, since it frees capital in the private market for more productive uses than fueling the federal government’s spending binge. However, even in the best of times, we have only been able to win 56 votes in the Senate for repeal, just shy of the needed 60. With the current makeup of Congress, permanent repeal is simply not in reach.

With that in mind, Democratic Senator Blanche Lincoln and I offered an amendment to the Senate budget resolution in 2009 that attempted to strike the best compromise. It would have permanently established a 35 percent death tax rate with a $5 million exemption amount indexed to inflation. That amendment passed by a vote of 51 to 48 with the support of 11 Democrats and every Republican senator. But, unfortunately, the congressional budget resolution is only an advisory measure.

Gee, after we say something passingly nice about the left-wing advocacy group OMB Watch, they attack two Senators for daring to challenge the death tax:

Long Overdue Outrage Over the Anti-Estate Tax Crowd

Both the New York Times and the Washington Post ran lead editorials this morning denouncing the attempt of Sens. Blanche Lincoln (D-AR) and Jon Kyl (R-AZ) to give yet another tax cut to the children of the very richest Americans. Both editorials are spot on and raise excellent points about why Sens. Lincoln and Kyl seem to be both out of touch and out of their minds. In fact, both editorials express far more outrage and disdain for this proposed tax cut than I’ve ever seen before in any newspaper. (Read the Times and Post editorials.)

(Adam Hughes 04/02/09)

“Out of their minds.” OK, here’s the testmony of Eugene Sukup, chairman of the board of Sukump Manufacturing Company in Sheffield, Iowa, speaking at a November 2007 hearing of the Senate Finance Committee.

I’m not bragging when I tell you that businesses like Sukup Manufacturing are the backbone of our economy. By the same token, when a business like ours is sold off or shuttered, the loss to the economy is great. If Sukup closed today, 350 people would lose their jobs. But, that’s just the beginning. Without jobs, there’s no reason for a child care center. As people move on to other places, the restaurants and stores close down, the dentist moves to a bigger city with more customers. The loss would be felt in Iowa, in Arkansas, in South Dakota.

Now, to be clear, we’re a growing company. So, why would we close down or sell off? I’m here today to tell you that one of the greatest threats to our family-owned business is the estate tax. If my wife Mary and I died today, we estimate that our estate tax liability would be somewhere between $15 and $20 million dollars. The only way for my sons to pay that tax would be to sell off the business.

Folks will tell you that you can “avoid” the tax. Well, maybe that’s true in some cases, but it also involves extremely high financial planning costs including expensive life insurance policies that businesses pay year in and year out. Money that we put into life insurance policies and other financial planning tools to avoid the tax is money that we could have been putting into the business - hiring more employees and expanding into other states.  

Any insults about mental health you want to throw his way? Mr. Sukup is, after all, a member of the “anti-estate tax crowd.”

We bet most of his employees are, too.

(NAM Executive Vice President Jay Timmons is blogging from the Republican National Convention this week in St. Paul, Minn., following up on his reports from the Democratic Convention last week in Denver.)

John McCain’s Senate colleague from Arizona, Jon Kyl, was appropriately honored at a reception yesterday in Minneapolis. The second-ranking Senate Republican, Kyl is an economic stalwart who truly understands the importance of lower taxes, limited regulation and strong energy policy to economic growth and job creation.

He remains steadfast in insisting that the tax extender legislation be completed before Congress leaves town for the year and that they not contain tax increases. This legislative package is tremendously important for manufacturers as it includes energy efficiency, R&D tax credit and international provisions that will help protect and grow jobs. These provisions need to be passed before Congress adjourns and we are hopeful that a bipartisan agreement can be reached that does so without offsetting tax increases.