Simpson, Otter to back tougher rules on bankruptcies

Idaho congressmen also push repeal of estate tax in House

By CHRISTOPHER SMITH
Associated Press

BOISE -- Tougher rules for declaring bankruptcy and a permanent repeal of federal estate taxes will be backed by Idaho's two U.S. House members in key votes in Congress this week.

Idaho had the 10th-highest number of bankruptcy petitions per household last year, according to the nonpartisan American Bankruptcy Institute. In the last federal fiscal year, 9,790 cases of bankruptcy were filed by Idaho residents, according to the Administrative Office of U.S. Courts. That's up more than 7 percent from the 9,051 bankruptcies filed in fiscal 2003.

This week, the U.S. House will consider a Senate-passed bill creating a "means test" that would make it harder for people to avoid paying their debts under Chapter 7.

"When the founders of our country said we weren't going to have a debtors' prison, they meant we were going to give everybody the opportunity to work these things out for themselves," Rep. C.L. "Butch" Otter, R-Idaho, said Monday while introducing a statewide campaign to promote basic money management skills. "If the founders saw what was going on now with these people who go out and get three or four credit cards, run them up to the limit, then walk away, they would say, 'Get a rope.'"

Rep. Mike Simpson, R-Idaho, said the new means test would provide financial respite for people truly in need of bankruptcy protection, but crack down on those who try to abuse the system.

"Bankruptcy should not be a form of financial planning and it's becoming that way for too many people," Simpson said.

The Idaho lawmakers also plan to support making a 2001 rollback of the federal estate tax permanent, rather than temporary.

Before passage of the 2001 tax law, heirs of an estate valued more than $675,000 were subject to a 55 percent federal tax. The law provided for a gradual decrease in the tax rate and full elimination by 2010, but only for one year.

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