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Baucus, voting with GOP, says he wants deal on estate tax
Senators talk to reporters on Capitol Hill Thursday after losing a vote on the estate tax bill. From left are Sen. Jeff Sessions, R-Ala., Sen. Robert Bennett, R-Utah., and Sen. Conrad Burns, R-Mont.

WASHINGTON — Sen. Max Baucus, who split with most of his fellow Democrats on Thursday and voted in favor of a permanent repeal of the tax on inherited estates, will continue negotiating the issue in hopes of reaching a compromise that could pass the Senate this year.

Baucus and just three other Democrats crossed party lines to vote for limiting debate and moving ahead with the estate tax repeal bill. Supporters needed 60 votes to push forward but fell short by three votes, 57-41.

"For our state, the land values are going up so much," Baucus said in an interview. "I talk to so, so many people who tell me it's very concerning. We're a small-business state, a family farm and ranch state, it's critical that people get relief."

Senate GOP leaders vowed after their loss to bring the matter up again this year. Baucus said Senate Majority Leader Bill Frist, R-Tenn., asked him Thursday to continue pursuing a compromise and that meetings on the issue will begin again next week.

Baucus, the top-ranking Democrat on the Finance Committee, which handles tax issues, wouldn't predict if or when a compromise would be reached. "Who knows?" he said. "I very much hope soon."

Sen. Conrad Burns, R-Mont., also voted for the repeal.

"Farms and ranches are valuable on paper but often cash poor, and when the death tax comes due it is not welcomed," he said. "No one should have to sell the farm to save the farm."

The U.S. House already passed a bill repealing the estate tax.

Repealing what they call the "death tax" is a top priority for Republicans, especially in this election year. They say it unfairly penalizes ranchers, farmers and small-business owners.

But Democratic leaders said very few small businesses and family farmers pay any estate tax. They say its repeal would be a boon for the wealthiest Americans and drive up the deficit for future generations to pay off.

Asked about that concern, Baucus said both revenue and spending factor into the deficit and that the federal government could raise revenue by collecting all the legally owed income taxes that people fail to pay, which he said amounts to $300 billion each year.

"I feel that we should not put the burden of raising revenue on the backs of small-business owners, ranchers and farmers in our state," he said.

Baucus criticized Republican leaders for forcing the vote on Thursday and said they should have allowed more time for him and other senators to reach a compromise. In a speech from the Senate floor Wednesday, he called the planned vote a political exercise and a reward to interest groups.

After the vote, he said, "It's clear that repeal of the federal estate tax would not get the necessary 60 votes. Given that, I thought it was better to try to work out some kind of compromise rather than allow a vote that results in failure to repeal the federal estate tax. If we had not had that vote, we'd be in a better position to work out an accommodation or agreement."

One compromise he had pursued with Sen. Jon Kyl, R-Ariz., would have exempted the first $5 million of an estate, or $10 million for a couple, and taxed remaining assets at 15 percent.

Currently, the first $2 million of an estate, or $4 million for a couple, is exempt and the top tax rate is 46 percent.

As part of the President Bush's 2001 tax cut package, the estate tax will be phased out until it is zero in 2010. But in 2011 it will be back in force at pre-2001 levels.

Baucus said his party leaders would not penalize him for his vote. "We're here to represent our states, and that's understood," he said.

The three other Democrats who voted with Baucus are Sens. Blanche Lincoln of Arkansas, Ben Nelson of Nebraska and Bill Nelson of Florida. Two Republicans, Sen. George Voinovich of Ohio and Lincoln Chafee of Rhode Island, voted with most Democrats.