WASHINGTON – The Senate voted to block a repeal of the federal tax on multimillion dollar estates, dealing a setback to Republicans and the Bush administration.

The Republican proposal failed to clear the 60-vote threshold necessary to overcome a procedural hurdle. The 57-41 vote ends for now the hopes of opponents that the levy, dubbed a “death tax” by Republicans, will be permanently repealed.

The Senate minority leader, Harry Reid, a Democrat of Nevada, said Republicans were focusing on a tax that affects less than 1% of the population while ignoring higher priority items such as gas prices, uninsured workers, a rising national debt, and an outdated minimum wage.

“The estate tax is not high on the agenda of people in Nevada,” he said. “I think we’re wasting precious days.”

The Senate was the last hurdle for groups that have lobbied for repealing the estate tax for more than a decade. The House of Representatives voted 272-162 in April 2005 to repeal the tax on a permanent basis, and the Bush administration says it wants to abolish the levy. The Senate fell six votes short of repealing the tax permanently in 2002.

The vote leaves in question the fate of an alternative proposal championed by Senator Kyl, a Republican of Arizona and the chairman of the Finance Committee, Senator Grassley of Iowa, that has gained some support from Democrats. That proposal would only tax estates valued at more than $10 million at rates of between 15% and 30%.

“With the possibility of full repeal cut off it’s time to find an alternative solution that will offer relief to folks like the ranchers and farmers in my home state of Montana,” said Senator Baucus, the top Democrat on the Finance Committee, who broke with his party today and voted in favor of proceeding with repeal.

Senate Majority Leader Frist vowed to resurrect the issue later this year, though before the vote he warned that failure to end debate also would remove the opportunity to vote on Messrs. Kyl and Grassley’s alternative.

“This won’t be the last time this year the Senate votes on this important issue – be it on the floor or in some other form,” Dr. Frist said after the vote. “Getting rid of the death tax is just too important an issue to give up so easily.”

Republicans fell short largely because they lost the support of Democrats like Senators Wyden of Oregon and Landrieu of Louisiana who backed full repeal in the past. Both have cited concerns about a widening budget deficit among the reasons for their opposition yesterday.

Republican Senators Chafee of Rhode Island and Voinovich of Ohio both opposed the measure. Democrat Senators Bill Nelson of Florida, Ben Nelson of Nebraska, and Lincoln of Arkansas joined Mr. Baucus in voting in favor.

Mr. Reid said the alternative proposal is an “absolute farce” because it would spare wealthy decedents from paying up to 90% of the estate taxes they would otherwise owe.

“Someone who is worth $30 million net – that’s a lot of money – they would be paying less taxes than someone who works at a plant in Henderson, Nevada,” Mr. Reid said.

President Bush’s 2001 tax cut began phasing out the estate tax through 2010, when it will be repealed for one year. It currently assesses rates of up to 46% on estates valued at more than $2 million. Unless Congress acts, the tax is scheduled to return in 2011, with rates as high as 55% on estates valued at more than $1 million.

The Bush administration yesterday reiterated its support for the elimination of the levy.

“Permanent repeal of the death tax would relieve thousands of families with small businesses, farms, and ranches of its excessive and unfair costs and would mean that many more family businesses could thrive as a source of continuing job creation and economic growth,” the administration said in a statement.

Abolishing or reducing the tax would appeal to Republican voters, though fewer than 1% of American families are wealthy enough to pay it. Critics of the levy such as Mr. Kyl say many small-business owners spend hundreds of thousands of dollars on lawyers and life insurance premiums to avoid paying it.

Dr. Frist said in an interview yesterday that the estate tax is “confiscatory” and at times amounts to as much as quadruple taxation of some assets.

Proponents of retaining the tax such as Senator Dorgan, a Democrat of North Dakota, say most large estates contain unrealized capital gains that have never been taxed.

“This is about allowing the wealthiest Americans, much of whose wealth accumulation has never borne a tax, to escape taxation at a time when we’re up to our neck in debt and at war,” Mr. Dorgan said in an interview yesterday.

The bipartisan congressional Joint Committee on Taxation estimated in 2005 that repealing the estate tax would cost the federal government more than $71.6 billion a year in lost revenue by 2015; the Treasury Department estimates the revenue loss at $65.8 billion that year.

Repealing the estate tax would subject more people to taxes at death than currently pay them under current law because it would impose a capital gains tax on many inherited assets, according to an analysis by a Democratic tax expert.

The report in the journal Tax Notes by John Buckley, chief tax counsel for the Democratic staff of the House Ways and Means Committee, said permanent repeal would subject up to 71,400 estates annually to capital gains taxes beginning in 2010. Under current law, 7,500 estates would be subject to the estate tax in 2009, according to the Joint Committee on Taxation.