The House is preparing to make permanent the repeal on the estate tax that was part of the first go-round of tax cuts in 2001.
Or, to put it more delicately,
This is unnecessary, irrational and unaffordable. Those who inveigh against the “death tax” point to the travails of family farmers and other small-business owners whose heirs are supposedly forced to liquidate enterprises to pay the tax bill. In fact, even if the estate tax were to revert in 2011 to its 2001 level — and no one believes that the exemption will remain at $1 million — it would affect the estates of only 2 percent of those expected to die that year. At $3.5 million (and $7 million for a couple) — the level proposed in a Democratic alternative sponsored by Rep. Earl Pomeroy (N.D.) — a mere three-tenths of 1 percent of estates would be covered. In other words, no one but the richest Americans would be asked to pay estate tax. [Washington Post editorial]
So what alternatives are there? Moving Ideas, a project of The American Prospect, has some thoughts on the matter.
Instead of an outright repeal, tax fairness groups are calling for reforms to ensure that the average working family is exempt while not letting millionaires off the hook. They propose that exemptions for family farms and businesses be simplified and improved and that the estate value subject to the tax be raised to $3.5 million, or $7 million for couples. These reforms would provide relief for 88% of current applicable estates leaving only the largest 0.25% of estates subject to the tax.
Knowing that the wealthy will be able to lobby — or just plain buy off — members of Congress, going for the reform ideas might be a better approach and would appeal to all but the most rabid anti-taxers, such as Robert Novak, who thinks the rich shouldn’t have to pay any taxes as their reward for being so wealthy. (That same mindset led to the French Revolution, Bob — want some cake?) After all, how many people in this country are actually paying a huge estate tax to begin with? If they were too stupid or ignornant to hire a decent accountant to advise them on how to avoid it, it makes sense that they should pay up. It’s about time this country made some money off stupid rich people.