In the weeks after the late August 2005 disaster, legislators deemed the 'death tax' on million-dollar estates too great a contrast with the protracted suffering of the disproportionately poor people struggling in the flooded city on the Mississippi River.
The memories of Katrina are fading, and the Senate this week made another attempt to pass a law for which the families of 18 billionaires have lobbied intensively for years, according to media reports.
The measure won a majority Thursday in the Senate, 57-41, but fell short of the 60 votes needed to end debate, effectively killing the legislation.
At stake was 778 billion dollars over 10 years that the federal government is estimated to collect in estate taxes. Only around 0.5 per cent of Americans have net worths large enough for their estates to be assessed after they die.
The centre-left opposition Democrats argue that to cut or eliminate the estate tax would have benefited people who need it least, at a time when the government is again running large annual deficits.
The centre-right Republicans, who hold a 55-45 majority in the 100-seat Senate, counter that a 'death tax' against people after a lifetime of paying income taxes is unfair. They also claim that small and medium-sized businesses are often liquidated to pay estate taxes of prosperous entrepreneurs, killing jobs and distorting the economy.
On Thursday, several moderate Democrats joined Republicans in voting for a repeal, but two Republicans defected from their caucus to help block the legislation.
The lower House of Representatives has already passed a permanent abolition of the tax.
The heated debate has trained a spotlight on economic contradictions in the world's richest country.
Even as millions of new jobs have been created, middle-class wealth has grown only slowly in a country with 2 million millionaires.
US President George W Bush and his fellow Republicans have, in the view of the Democrats, contributed to growing social divides through sharp tax cuts.
The inheritance tax is already being phased out by 2010, but the law was written to fully restore the tax in 2011, creating a chaotic and arbitrary situation for taxpayers.
According to a survey by the Brookings Institution, inheritance taxes are payable in only one out of every 200 deaths. Others, especially the mega-rich, are able to avoid inheritance taxes by shielding their assets in complicated financial trusts with the help of an entire estate planning industry.
'The government is taking almost half of everything that families have worked for and saved their whole lives,' says Republican Senator Jon Kyl, pointing to the highest rate of 46 per cent.
Estates valued at up to 2 million dollars - 4 million in the case of couples - are not affected.
Those on the political left are outraged by the repeal attempts.
Senator Tom Harkin refers to 'tax gifts to the millionaires, while there are deep cuts for society's weakest.'
Farmers' associations and family businesses have contradicted the argument that the taxes threaten the very existence of small businesses. Bush and the members of his cabinet alone would gain at least 91 million dollars from the abolition of the taxes, according to calculations by Democrats opposed to the legislation.
Bush and his supporters on the right argue that their tax cutting policies have facilitated strong economic growth despite years of economic upheaval, including a stock-market bubble, terrorism, war and now high energy prices.
They cite the record number of US home owners and unemployment below 5 per cent as evidence of the effectiveness of these economic policies. And they maintain that the American Dream of making it from dishwasher to millionaire is more relevant than ever.
The careers of Microsoft founders Bill Gates and Paul Allen, who have become the richest men in the world within 30 years, are proof of this, they say, pointing also to the undiminished yearning of millions around the world to seek their fortunes in the US.
Despite Thursday's defeat, the inheritance tax debate will continue. Republicans have vowed to make another attempt at Senate passage - perhaps in a compromise version to ease but not eliminate the levy - before congressional elections in November.
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