Shelley Berkley sports fiscally conservative streak

By Lisa Mascaro

Wednesday, Dec. 2, 2009 | 2 a.m.

There was a time, earlier in her career, when Rep. Shelley Berkley faced substantial challengers threatening to brand her as a tax-and-spend Democrat, too liberal for her Southern Nevada congressional district, which in those years included much of the surrounding region.

Berkley fought back against those labels by staking out a stance on one issue in particular: the repeal of the estate tax, which continues to this day.

As a freshman congresswoman in 2000, Berkley was among those Democrats who crossed party lines to support the repeal of the estate tax — even voting in an unsuccessful House attempt to override President Bill Clinton’s veto of the bill.

When President George W. Bush wanted to reduce the estate tax as part of his massive 2001 tax cut, she was among the few dozen Democrats who handed the president that victory.

Now, nearly a decade later, Berkley, who won her last election with nearly 70 percent of the vote, is again championing the issue she readily admits is not a top priority for her Las Vegas constituents.

The tax primarily affects the very wealthy, 0.2 percent of estates nationwide, according to the Center for Budget and Policy Priorities. Census figures show the median family income in Las Vegas is $63,500, with more than one in 10 people in the city living below the poverty level.

“My phone is not ringing off the hook with people asking me to support it,” Berkley acknowledged. “It’s purely philosophical for me.”

The estate tax is derided as a “death tax” by those who oppose it, claiming it’s unfair for citizens to visit the undertaker and tax collector on the same day. But supporters say the wealthy can afford to pay their share toward providing government services.

Under current law, those who die and pass on an inheritance are taxed up to 45 percent on estates above $3.5 million for individuals or $7 million for families. (Before the Bush tax cuts of 2001, the tax was much higher — up to 55 percent on inheritances above $675,000.)

The law expires at the end of 2009 and after a one-year reprieve, it is scheduled to revert to the higher, 55 percent rate on estates above $1 million in 2011.

Not many lawmakers in Washington want to raise taxes on dead people. In both the House and the Senate, among Democrats and Republicans, there is widespread acknowledgment that something will need to be done by year’s end to prevent higher estate taxes from taking hold.

Yet, with the recession causing financial hardship and double-digit unemployment across the country, Congress also wants to avoid a protracted debate over a tax cut that falls mainly on the well-to-do.

Ronald Aucutt, a partner at McGuireWoods law firm, who is routinely rated among Washington’s top trust and estate attorneys, said there is “a lot of restlessness or impatience with the estate tax in both the House and Senate.”

House Democratic leaders, including the powerful chairman of the House Ways and Means Committee, Rep. Charles Rangel of New York, would like to pass a bill that makes permanent the 45 percent tax on estates above $3.5 million for individuals and $7 million for couples.

In the Senate, a similar bill is pending from Montana Sen. Max Baucus, chairman of the pivotal Senate Finance Committee. It also has backing of key liberal Democratic senators.

The Obama administration has indicated it, too, would like to keep the current tax rate.

But Berkley has inserted herself into the debate with a grander plan. The Las Vegas congresswoman would like to lower the tax rate to 35 percent and increase the exemption, so that estates are not taxed until they top $5 million for an individual and $10 million for a couple. Berkley has a growing list of bipartisan supporters for her effort.

“There has to be something you can do to avoid paying taxes — and dying has to be one of them,” Berkley said recently.

If the congresswoman had her way, she would seek elimination of the estate tax, something she realizes “is not going to happen” in the current economic climate. But her zeal puts her squarely on the side of fiscal conservatives who are not her traditional allies in Washington.

The House is expected to take up estate tax legislation this week, possibly Thursday. The Senate schedule is more uncertain.

Asked Tuesday whether there was interest in a more generous estate tax measure as Berkley proposed, Democratic Sen. Kent Conrad of North Dakota, chairman of the Senate Budget Committee, said flatly: “Where’s the money?”

The motivation to cut the estate tax further may have faded. Berkley’s bill would cost $91 billion more than preserving the status quo, according to the Center for Budget and Policy Priorities.

“Both the economic and political climates are so different than they have ever been (that) it’s very hard to generalize based on how people have behaved in the past,” Aucutt said. “ ‘Don’t give tax cuts to the rich’ has been a fairly effective campaign issue in some districts, just as the death tax has been in other districts.”

Berkley hopes that even if the House skips her bill, her work will influence the debate.

Berkley waxes on about the legislation, how her bill would help small-business owners and one group of constituents she lacks in Las Vegas — family farms. The congresswoman sounds more like a disciple of Ronald Reagan’s trickle-down economics than a six-term Democratic representative.

“If the wealth is kept intact, that’s good for the economy,” Berkley explains. “It’s small businesses. It’s the farmers. It’s families who have invested an entire life. This is to protect them, to keep their assets intact when they pass away.”

For the congresswoman who is running for reelection with money in the bank and no leading challenger at this point, there does not appear to be an urgent reason to burnish conservative credentials for the campaign. Yet Berkley has made no secret of her interest in running for Senate someday, perhaps against Republican Sen. John Ensign in 2012 or to fill the open seat if Ensign decides not to seek reelection.

Berkley’s work on the estate tax could be used to remind Nevadans of her fiscally conservative streak, a quality that would play well outside of her now more narrow Las Vegas district, among the ranchers and small-business owners in the rural areas of the state.

“My political philosophy is not targeted to any particular group: You give people back as much tax money as possible so they can either pass it on or use it to enhance the quality of their life, but you don’t do it in a way that inhibits the federal government from providing the services that are needed,” Berkley said. “If we could reach a compromise and finally put this issue to bed, we would be doing a great service.”