The death tax lives on. The Senate, on June 12 announced that it rejected a Republican effort to permanently repeal the federal inheritance tax. The defeat could result in an eight-year battle over whether or how much to tax assets of the departed, according to a Wall Street Journal story by Shailagh Murray.

A permanent repeal of the estate tax, which would benefit the very rich, has polarized Congress. Republicans assert the tax penalizes success and are expected to trumpet the issue in

this fall's election. Under a much larger package of tax cuts passed last year, the estate tax is being phased out gradually every year until it is fully eliminated in 2010.

But unless Congress takes further action, it will be reinstated in 2011 at its pre-cut rates. That strange political compromise means, for example, that the estates of people who die in 2009 will be taxed at up to 45 percent with the first $3.5 million exempt. The next year, the government won't take anything. And then in 2011, estates will once again be taxed at up to 55 percent with only the first $1 million exempt. (Anything that goes to surviving spouses and charity is exempt.)

With both parties jockeying for election-year advantage, the Senate rejected three attempts

that would have permanently resolved the issue, two Democratic attempts to reduce the tax permanently and one Republican attempt to kill it outright.

The vote on repeal was 54-44. Under Senate budget rules, the repeal required 60 votes to prevail. GOP leaders have promised to resurrect their bid for a permanent repeal after Oct. 1, when the current budget expires along with the 60-vote budget-rule hurdle. But Democrats likely would filibuster or use other procedural obstacles that require the same 60-vote majority to be overcome, according to the Wall Street Journal.

The American International Automobile Dealers Association (AIADA) expressed its disappointment at the Senate's failure to

permanently repeal the death tax. "It's a sad day for auto dealerships and other small businesses across America," said AIADA President Walter Huizenga. "Permanent repeal of the death tax and the elimination of the sunset provision in the law remains AIADA's top legislative priority and we will be vigilant in our efforts to see that this unfair tax goes away for good."